BUSINESS BEFORE QUESTIONS

Queen's Speech (Answer to Address)

The Vice-Chamberlain of the Household reported Her Majesty's Answer to the Address, as follows:
	 I have received with great satisfaction the dutiful and loyal expression of your thanks for the Speech with which I opened the present Session of Parliament.

Appointment of Chair of Electoral Commission

The Vice-Chamberlain of the Household reported to the House, That the Address of 17 December, praying that Her Majesty will appoint Jennifer Watson to the Office of Chairman of the Electoral Commission with effect from 1 January 2009 for the period ending on 31 December 2012, was presented to Her Majesty who was graciously pleased to comply with the request.

ORAL ANSWERS TO QUESTIONS

HEALTH

The Secretary of State was asked—

District General Hospitals

David Kidney: What recent assessment he has made of the contribution that district general hospitals make to improving the health of the public in their local communities.

Ben Bradshaw: District general hospitals provide a vital range of services for local people, and the level and range of their activities have expanded significantly in recent years. At the same time, some treatments that used to be provided in hospitals can now be provided in the community and smaller local hospitals, GP practices or even people's homes, while some specialisms and acute treatments are best provided in specialist centres, which can offer the necessary round-the-clock professional and technical expertise and capacity.

David Kidney: After last year's scare stories from some quarters about mass closures of district general hospitals, I thank the Minister for a reassuring answer. Does he agree that to be truly effective in serving their public in future, those hospitals need very strong links with their primary health care, social services, housing providers and the third sector, and that that is especially important against the background of an ageing and growing population, if they are to keep to a minimum admissions to hospitals in the first place and re-admissions after discharge into the community?

Ben Bradshaw: My hon. Friend is right, although a hospital's role is, of course, mainly to help deal with people when they fail to prevent an illness for one reason or another. It is important that hospitals work closely with primary care trusts, social services and others on the public health agenda, and one of the things that the next stage review published by my noble Friend Lord Darzi made clear last year is that we now expect every primary care trust in the country to commission comprehensive well-being and prevention services based on local needs, but including delivery on a number of important issues, such as mental health, obesity, alcohol, smoking and sexual health, which I hope are being provided for in my hon. Friend's constituency.

Simon Burns: Can the Minister please explain to my constituents what positive contribution there can be to improving health care from the Mid-Essex Hospital Services NHS Trust receiving about £1 million a year in car park fees, which many of my constituents regard as a tax on health care?

Ben Bradshaw: The hon. Gentleman should be aware that the shadow spokesman on health supports the freedom of hospitals in England to levy acceptable charges to help cover the cost of hospitals; if they did not levy those amounts, they would have to take them away from patient care. I often get questions on the subject from hon. Members such as "What about Scotland?" or "What about Wales?" In Scotland and Wales, people wait much, much longer for their operation. If the hon. Gentleman has a particular problem with his local hospital's policy, he should take that up with the hospital, which is supposed to offer concessions to people who need to visit regularly. If he is suggesting that everyone at his local hospital should be able to park freely, regardless of what they are doing there, that is a very foolish approach and it would take money away from essential medical need.

Eric Illsley: One of the issues that is affecting district general hospitals such as mine in Barnsley is their inability to attract sufficient numbers of doctors. The postgraduate dean at the Yorkshire and the Humber NHS Deanery has done some work on the issue, which shows that in certain areas of the country, including Yorkshire and Humberside, we are under-provided for in almost every discipline in health. I have written to my right hon. Friend the Secretary of State for a meeting to discuss this, but will my hon. Friend look into the matter to try to determine what we can do to redress the balance between Yorkshire and Humberside and other areas of the country, such as London and the south-east?

Ben Bradshaw: We have record numbers of doctors, health care professionals and health services, as my hon. Friend knows. I will certainly look into the concern that he raises about Barnsley and his local area. I would find it surprising, however, if it was even more challenging for Barnsley and the surrounding area to attract good doctors and staff than it is in London, where attracting them can be a particular challenge, for a number of reasons which most hon. Members understand. I will have a word with the strategic health authority covering Barnsley, which is responsible for ensuring that work-force planning is carried out effectively and that the needs of local hospitals, including his own, are fully appreciated.

Ann Winterton: Does the Minister acknowledge the excellence of our local district general hospital at Macclesfield? It has retained superb maternity and accident and emergency units and is applying for NHS foundation status. Does he recognise that it serves not only the towns of Macclesfield and Congleton, but a huge rural area? Patients come from Derbyshire and Staffordshire as well as Cheshire. Such district general hospitals must be retained for the future health care needs of a very large area.

Ben Bradshaw: I am pleased to acknowledge the very good work done by Macclesfield hospital and I wish it all the best with its application for foundation trust status.

Alan Simpson: One under-recognised aspect of the role that district hospitals can play is nutritional standards and food procurement policies. In that context, will the Minister add his own congratulations to those given to the Nottingham University Hospitals NHS Trust on the award that it is to receive from the Soil Association on 20 February in relation to the Food for Life programme? The trust has won the award because it threw out the external food contractors and sourced its food supply from local farms, generating 300 jobs in the local food supply industry. Will the Minister also inquire into how he could assist the hospitals in making the next step to developing a sustainable community kitchen that would put £6 million of investment into raising nutritional standards and supporting the local food infrastructure?

Ben Bradshaw: My hon. Friend raises an important point, and I congratulate Nottingham on the work that it has done. Such work is replicated in a number of other hospitals around the country, including the Royal Brompton hospital and including in Cornwall. In those hospitals, good local food procurement policies have not only saved money but—the evidence gives this impression—helped to improve recovery rates and general patient satisfaction. We are working actively in the Department and the NHS to see whether that good practice can be spread. We are also consulting on the registration requirements for NHS providers, including hospitals. It is likely that those requirements will include good performance on nutrition.

Daniel Rogerson: Further to the Minister's initial answer, will he give a little more detail on what is being done to encourage primary care trusts and district general hospitals to work together to provide more services closer to where people live? He will be aware that in my very rural constituency, people live some distance from a district general hospital. What is being done to ensure that people can be treated closer to home?

Ben Bradshaw: Rather than reel off a long list, I shall give the hon. Gentleman a concrete example from my own area. Until recently, people in the area needing renal dialysis had to come to the Royal Devon and Exeter hospital in Exeter to have it done. The service has now been devolved out to the community hospitals, including one in Honiton. People who used to have to travel into Exeter no longer have to travel such distances. That is just one example of a range of services, including in Cornwall. People in Cornwall used to have to access such services by going to Plymouth or Torbay; now they can stay in Cornwall and get them. That is the direction of travel in the health service, and it is absolutely right that it should be. Where possible, people should be treated in their home or community, but when a specialist or acute need can best be met in the safety of a specialist and centralised environment, that is where it should happen.

Obesity (Physical Activity)

Andy Reed: What steps he is taking to increase levels of physical activity to tackle obesity.

Alan Johnson: The Government strategy document "Healthy Weight, Healthy Lives" sets out the steps that we are taking to tackle obesity. In addition, tomorrow the Government will publish a new national plan for the delivery of physical activity alongside sport for the period leading up to the London 2012 Olympic and Paralympic games, and beyond. The plan is part of the wider cross-Government strategy, including the flagship Change4Life campaign, to increase participation in physical activity and to reduce obesity.

Andy Reed: I congratulate the Secretary of State on the strategy to be launched tomorrow. It is vital that there should be a co-ordinated approach to the issue locally. As he knows, and as the National Institute for Health and Clinical Excellence clearly explains, physical activity is the best way to tackle obesity in the long term and one of the most cost-effective ways of doing so. There is a great deal of experience in county sports partnerships. Will he ensure that there is a co-ordinated approach with primary care trusts and CSPs locally, so that there is no duplication? Over time, will he ensure that there is an increase in funding from the Department of Health to cross-match what is coming through sport and other physical activity through local government as well?

Alan Johnson: My hon. Friend is an expert in this area, and he will be delighted to learn that one of the aspects of the plan to be launched tomorrow is energising the existing regional and local delivery structure. He knows about this because he is chair of Leicestershire county sports partnership. He will be pleased to hear that the plan recognises the important role that CSPs can play in local delivery, and that we are investing new money to enable them to continue the seamless co-ordination of physical activity and sport at a local level. To complete his afternoon of happiness, he will also be delighted to hear that crucially, for the first time, we are setting out the financial costs to local authorities of inactivity. That is an important driver in getting the few recalcitrant local authorities—and perhaps, in some rare cases, NHS trusts—to work together to tackle these issues.

Nadine Dorries: I am sure that the Minister agrees that the main way to increase levels of physical activity is to foster and garner a love of sport in the young. Unfortunately, many teachers in my constituency tell me that owing to the number of Government-led educational targets they have to meet, the first subject to give way to allow them to do so is sport and physical activity. Should not the Minister be cross-referencing with the Department for Children, Schools and Families to guarantee that children from a very young age get the love of sport that we, at our age, had in our schools?

Alan Johnson: I do not know whether we did have it in our schools. The amount of time, money and effort going into school sports is in a different dimension from when we came into government in 1997; we are not just getting to four hours a week of sport and physical activity in every school, but moving towards getting six hours by 2010-12. Another myth that arises concerns school playing fields. Ten thousand school playing fields were sold off between 1979 and 1997.  [ Interruption . ] "Still selling them off", says an Opposition Member. That compares with 192 sold off since 1997. Ninety-one of those schools had closed, and every one of the rest had to invest the money in better sports and educational facilities. I am very pleased to set the record straight.

Keith Vaz: The Secretary of State will know that 58 per cent. of type 2 diabetes cases come from obesity. He took a diabetes test when he came to Leicester, and the Minister of State, Department of Health, my hon. Friend the Member for Exeter (Mr. Bradshaw), will take one at 3.30 pm today. Does my right hon. Friend agree that one way of dealing with this issue is to have preventive work, not just exercise—on Sunday, he suggested that people should start dancing more—and that people should have these tests so that they can deal with the issue of diabetes and take the necessary medication?

Alan Johnson: I pay tribute to my right hon. Friend for the work that he has done in Leicester. I did indeed have the test at the splendid centre in the middle of Leicester. I was fine, by the way; for the record, I scored five. My right hon. Friend did the work to get that centre built in his constituency and to have a mobile testing centre that goes out to workplaces; indeed, it came down to the House of Commons a few months ago, and it is here today. He is absolutely right to talk about the importance of these tests. As he knows, they are part of a concerted effort, backed by Diabetes UK, to ensure that physical activity, proper diagnosis and early treatment are regarded as essential; they should be of the quality that they are in Leicester everywhere else in the country.

George Young: With the imminent arrival of Lent and the associated resolutions to lose weight, is this not a good time to have a gentle campaign to encourage people to walk or cycle to work?

Alan Johnson: I completely agree with the right hon. Gentleman. The Change4Life campaign is encouraging people to take small steps—not necessarily to seek to be Olympic athletes or champion dancers, but to build activity into their lives. It is helping them to make those small steps, such as walking to work or, if they have to get the bus, getting off a stop earlier. He will have seen the London underground map that Change4Life has refocused to say how long it will take someone to get to their destination if they get off the tube a stop earlier. Those small ways of ensuring that people can change their lives include cycling, dancing, of course—my hon. Friend the Member for Loughborough (Mr. Reed) did ask me what steps we were taking—and all aspects of physical activity, with a recognition that according to the statistics, if more people engaged in physical activity, we could reduce the number of premature deaths by about one in 10.

Mary Creagh: Wakefield PCT has allocated more than £1 million to local and voluntary sector community groups to help them participate in the Change4Life campaign to help people to change their lives. May I press my right hon. Friend on when we can expect the announcement of a final decision on food labelling, which is essential for parents and consumers if they are to make clear decisions in making the choices that they face in supermarkets? May I also press him on the point that, as part of Change4Life, we should educate parents about the dangers of sweet, sugary drinks and the hundreds of calories that they contain, with zero vitamins or benefits for children?

Alan Johnson: My hon. Friend has done sterling work in this field. I cannot give her a date on which we will make a final statement on food labelling, because the Food Standards Agency has been asked to carry out that work for us, and until it is complete, we cannot make a statement. I will say, however, that this country is well ahead of other countries in the world because retailers have voluntarily adopted food labelling systems. We would like one system, because that would be less baffling and less complex for consumers, but we admire the work that has taken place in this country to put voluntary food labelling at the forefront of these campaigns.

Andrew Lansley: I must say to the Secretary of State that after getting slapped down by Lord Mandelson the week before, it was good to see him get one up on Lord Mandelson this Sunday by having his own "Strictly Come Dancing". No doubt he will invite the noble Lord Mandelson to be a participant in that.
	I welcome the announcement of the Active England strategy, but it has taken a year to get there. I am afraid that the Secretary of State has got it wrong about school sports. The Government are not meeting their commitment to ensure that all pupils get two hours of sport a week in schools. In the school sport survey last October, the number of 11 to 16-year-olds getting two hours of exercise had gone down from 88 per cent. to 83 per cent. in a year. Will the Secretary of State, with his colleagues at the Department for Children, Schools and Families, ensure that the commitment to a minimum of two hours of exercise in schools is achieved, and will he tell us when will it be achieved?

Alan Johnson: From memory, the proportion of young children getting two hours of exercise in schools was about 24 per cent. when we came into government, so a drop— [ Interruption. ] Incidentally, I am not sure about the statistics that the hon. Gentleman just quoted. If there has been a slight drop, it should be seen in that context. Sport in our schools is essential to the sort of message that we seek to deliver, which is why we have pledged not just effort and time, but a huge amount of finance to meet those targets. And we will meet the target in 2010, just as I am absolutely sure we will move on to meet the extended target in 2012.

GP-led Health Centres (Battersea)

Martin Linton: What plans he has to introduce GP-led health centres in Battersea.

Ben Bradshaw: My hon. Friend's local NHS, like those in the rest of England, is planning a new GP-led health centre, open from 8 am to 8 pm, seven days a week. I understand that the proposal is to locate it near to Clapham Junction station.

Martin Linton: I thank my hon. Friend for recognising the health needs of Battersea in that new proposal, and in various other proposals to extend GP-led health centres. Will he assure my constituents that the range of facilities that can be offered in the new GP-led health centre will be far greater than can currently be provided in the Bolingbroke hospital, which is held in great affection, but is an old and impractical building?

Ben Bradshaw: I can assure my hon. Friend that the range of services provided in the new health centres will be big, and will meet the needs of the local population, which is one of the criteria we have laid down. I can also tell him that plans for the expansion of health services in his area are not restricted to this particular GP-led health centre. I understand that there are also plans to expand services at Doddington, Bridge lane and St. John's, including primary care services.

Mark Simmonds: In Battersea, the provision of primary care is vital to the health of the community, but according to the Royal College of General Practitioners, seeing a doctor who knows the patient and their medical condition personally is important to more than 75 per cent. of patients. Yet the Secretary of State recently said that he "could not care less" which GP he sees. That is totally out of touch with patient needs both in Battersea and elsewhere. Can the Minister confirm that continuity of care is important to the vast majority of patients, particularly those with long-term conditions? If so, why are he and the Secretary of State centrally imposing polyclinics, against patients' needs and wishes?

Ben Bradshaw: Yes, I am happy to confirm what the hon. Gentleman asks me to confirm. However, what he says is another of the myths that were peddled by both the Opposition and the British Medical Association, at the time, in their opposition to new GP health centres. I do not know whether he has now abandoned the Conservative party's opposition to the centres. I suspect that the Conservatives will quietly abandon that opposition, because where the new centres are opening, they are incredibly popular, not least with local Conservative councillors and Conservative MPs who want theirs to open as quickly as possible.
	Of course continuity of care is important for many patients, particularly those with long-term conditions. However, many people, such as professionals who are otherwise healthy and who are juggling work and family life, find it very difficult to see their GP, because of opening times. They warmly welcome the opportunity to see a GP, and they do not particularly mind whether it is always the same GP.

Influenza (2008-09)

Andrew Pelling: What estimate he has made of the incidence of influenza in the winter of 2008-09.

Dawn Primarolo: Information on the incidence of influenza-like illnesses is collected by the Royal College of General Practitioners. The rate of influenza-like illness started increasing in late November and peaked at 69 GP consultations per 100,000 people in mid-December. The rate of ILIs decreased to 13 consultations per 100,000 people by early February.

Andrew Pelling: I thank the Minister. Winter-prevalent diseases such as influenza and bronchitis lead to increased morbidity. I am told by two local undertakers in Croydon that that has led to a call on undertakers to take as many bodies as possible from south London mortuaries. I am told also that some south London hospitals have found it necessary to hire extra equipment for the cooling of deceased bodies. Is that a normal situation in the NHS, or is it peculiar to south London hospitals? Does it mean that additional support might be appropriate?

Dawn Primarolo: I do not know the exact details that the hon. Gentleman mentions, and I shall certainly examine the situation in his area specifically. The peak rate this year was a quarter of the level experienced in 1999-2000, which was the last severe flu season. The connection that he suggests between flu and early death is not showing up in the statistics at the moment, but I shall certainly give his points closer consideration and write to him.

Rob Marris: Can my right hon. Friend tell me what steps her Department takes to encourage primary care trusts to contact all older people—those in the influenza bracket, at over 60—and ensure that they are told about the availability of an influenza jab that would increase their chances of surviving the winter?

Dawn Primarolo: I can assure my hon. Friend that all primary care trusts have active policies with their GPs and make information available to those over 65 and others who are entitled to the free flu jab. The rate of patients being immunised with the influenza vaccine is increasing, and it is currently 74.1 per cent. That clearly needs to continue to rise to the 75 per cent. level we aim at.

Foundation Hospitals

Peter Bone: What criteria are used by NHS foundation hospitals when deciding on the location of their facilities.

Ben Bradshaw: The criteria are the same as those used by non-foundation trust hospitals. Any changes to be made to services must be for the benefit of patients locally and led by doctors and health care professionals locally.

Peter Bone: In Rushden, an out-patients facility is being closed. Some 6,000 constituents have written to me demanding that a replacement facility be built in Rushden. The NHS's weighted criteria state that it should be built in Rushden, but in fact it is being built in an adjoining constituency, in a small town. That constituency already has a minor injuries unit and is getting a new hospital. What is the difference between the two constituencies? One is the Conservative marginal seat of Wellingborough, and the other is the Labour marginal seat of Corby. Are not this miserable Government making decisions about health facilities based not on need, but on political advantage?

Ben Bradshaw: I am advised that no such decision has been made. The hon. Gentleman has been involved in detailed discussions with health care managers on the ground, who are considering the matter. I am sure that he recalls that we had an Adjournment debate on the subject. Kettering hospital and Northamptonshire primary care trust want to expand the out-patient provision in his constituency or for his constituents because they believe that the current provision in Rushden does not cover the numbers that they want to serve. Ultimately, what they are trying to achieve will mean that tens of thousands of people who must currently travel from the hon. Gentleman's constituency to Kettering hospital for treatment will no longer have to travel so far. I therefore urge him to continue his discussions with his local health service managers. I understand that they have not ruled out alternative locations if one can be found that provides his constituents with the health care that they deserve in the 21st century.

Paddy Tipping: Will the Minister be careful when he imposes criteria and regulations on foundation trusts? Clearly, local managers and professionals need to develop local solutions to local problems. That is important.

Ben Bradshaw: My hon. Friend is right. People who should know better often misunderstand—I hope accidentally—how the system works. Any changes to services, whether to a foundation or a non-foundation trust, are matters for the local health service. If the proposals are sufficiently significant for local authorities' democratically elected overview and scrutiny committees to think that they should be consulted, they must be consulted. If those committees remain unhappy, they can refer the proposals to the national independent reconfiguration panel. My right hon. Friend the Secretary of State has made it clear that he will respect and has respected all the IRP's recommendations, which include two recent ones in Conservative areas, where the IRP recommended against the local health service's proposals and its recommendations were upheld.

Acute Sector Staff (Assaults)

Anne Main: What progress his Department has made in reducing the number of assaults on NHS staff in the acute sector in the past 12 months.

Ann Keen: The NHS constitution recognises that staff have the right to work in a safe environment, free from violence. Staff are saying that they will not accept violence or abuse as part of the job, and they are demonstrating that by reporting violence. In 2007-08, the number of criminal sanctions following cases of assault in the acute sector increased by 13 per cent.

Anne Main: I thank the Minister for her response. She referred to an increase of 13 per cent. What are the exact figures for the number of prosecutions made in the past five years? If she has not got those figures, will she supply them to me?

Ann Keen: The NHS security management service has signed a memorandum of understanding with the Association of Chief Police Officers. It encourages trusts to agree a protocol with their local police on how they can work together. The SMS has also signed a memorandum of understanding with the Crown Prosecution Service to ensure the effective prosecution of cases that involve violence and abuse against NHS staff. This is a matter for local management, but the hon. Lady shows great concern about the issue which I believe is felt across the House. I am happy to supply her with as much information as I can.

Kevin Barron: Does my hon. Friend have figures to show how many assaults on NHS staff are fuelled by alcohol? What are the costs of such assaults to the NHS as opposed to law enforcement agencies?

Ann Keen: We are aware of the concern that alcohol causes staff, especially in accident and emergency units, and of how it infringes on their management of other patients as well as of the patient who has the alcohol problem at the time. Continual work is being done on the matter with the SMS, which continues to consider figures on that troubling subject.

Mark Pritchard: The number of violent attacks on Shropshire ambulance crews continues to increase, as does the number across the west midlands, so much so that Shropshire crews have had to resort to buying their own stab-proof vests. I have written to the chief executive of West Midlands Ambulance Service NHS Trust asking for the vests to be provided by the service. The reply is that the service is currently reviewing the situation. That review has been going on for some months. Is it not time that the Government spoke to West Midlands Ambulance Service NHS Trust and ensured that stab-proof vests are made available, in order that ambulance crews can do their duties and feel safe and their families know that they are safe?

Ann Keen: The hon. Gentleman raises a serious issue. It is up to the service to look at that, but I believe that the local and national standards that we, the police and all the agencies concerned are applying in respect of the worrying vulnerability of all our public sector workers will result in the correct policy, which will be managed locally, because that is how all such matters must be looked at in local decision making.

Jim Devine: As my hon. Friend knows, the Scottish Parliament introduced the Emergency Workers (Scotland) Act 2005, which offers legal protection to front-line health service staff such as doctors, ambulance personnel and A and E nurses. Do we have any thoughts about introducing similar legislation in this Parliament?

Ann Keen: A Ministry of Justice Bill addressed that issue last year, but I would be happy to discuss with my hon. Friend any areas that he has concerns about in relation to the serious issue of violence against staff.

Michael Penning: I am sorry to say that the Minister was very selective in her comments about how many assaults on NHS staff there were in 2007-08. The truth is that 12,500 staff who had gone to work to care for the community in this country were assaulted by cowards, and that criminal sanctions—I stress that they were not prosecutions, but sanctions, including some that were just cautions—were applied in fewer than 700 cases. Where is the zero tolerance that this Government promised to protect our emergency services?

Ann Keen: The hon. Gentleman raises an issue that concerns the entire House. When increases in violence against our front-line staff continue, it is a matter for us all to address, in order to get the prosecutions, which is why we work with the Crown Prosecution Service and, in particular, with the Association of Chief Police Officers. That is an area for the Crown Prosecution Service, but it is not an area that we dismiss in any shape or form, and it would be wrong to give that impression. We are talking about serious measures for serious times, for our hard-working front-line staff.

Undergraduate Courses

Howard Stoate: What assessment he has made of the adequacy of provision for teaching of therapeutics and prescribing in medical undergraduate courses.

Ann Keen: The General Medical Council has the statutory responsibility to determine the extent of the knowledge and skill required for the granting of primary medical qualifications in the United Kingdom. The GMC's document "Tomorrow's doctors" sets the standards and outcomes for undergraduate medical education. The GMC is currently consulting on the draft of a third edition, which would include a strengthening of the requirements in this area and, consequently, provide the opportunity to address any areas of concern.

Howard Stoate: Professor Webb of Edinburgh university recently told the Select Committee on Health inquiry into patient safety that the teaching of therapeutics and prescribing had all but disappeared from the undergraduate curriculum. A recent survey of medical students showed that 80 per cent. felt that they were either poorly or very poorly prepared for prescribing by the time they qualified. With drugs becoming more powerful and treatment regimes becoming ever more complex, surely it is important to ensure that medical students are properly equipped. Is there more that the Government can do to ensure that this valuable part of the curriculum is given the priority that it deserves?

Ann Keen: I thank my hon. Friend for that. The GMC is currently consulting on the draft of a third edition of "Tomorrow's doctors", which, as was noted on 22 January by the Health Committee, of which my hon. Friend is a hard-working member, enshrines the competences drawn up by the safe prescribing working group. Those competences are included in the draft. The consultation concludes on 27 March. The GMC will then consider all the representations received, before publishing the next edition in the summer of 2009. It will be the duty of us all to ensure that all our doctors' education is safe in its practice.

Robert Goodwill: Does the Minister agree that doctors should look not only at the efficacy of the drugs that they prescribe, but at their cost-effectiveness? Should they perhaps be trained in how to resist the beguiling attentions of the pharmaceutical salesmen who so often visit our GPs' surgeries?

Ann Keen: A strict code of practice governs this issue, as I am sure the hon. Gentleman is aware, and it is still a matter for the General Medical Council to look at all aspects of the training and practice of our medical practitioners.

Brian Iddon: May I draw my hon. Friend's attention to the all-party group on drugs misuse's report on physical dependence on, and addiction to, over-the-counter and prescription medicines? Does she agree with three of the report's recommendations—that medical staff should be properly trained to recognise these problems; that they should follow the prescribing guidelines laid down by the Department of Health; and that they should be aware of the withdrawal protocols in cases where people have become physically addicted or dependent?

Ann Keen: My hon. Friend raises issues of concern, and I fully accept that we should study them carefully.

Lightning Process

Celia Barlow: What guidance his Department has issued to NHS trusts on the use of the lightning process in the treatment of people diagnosed with chronic fatigue syndrome.

Phil Hope: The Department has issued no guidance on this process, because we expect decisions on clinical interventions, whether they involve complementary or alternative treatments, to be made by front-line clinicians. In making such decisions, clinicians will take into account evidence for the safety and clinical and cost-effectiveness of the treatment concerned.

Celia Barlow: I thank my hon. Friend for his reply. Sussex ME and Chronic Fatigue Society works tirelessly to assist the 6,000 adults and children across the county who suffer from the disease, and several of those people have been contacted about the success of the lightning treatment. Will he assess that treatment, in conjunction with the bodies that he has mentioned, and monitor how successful it is?

Phil Hope: It is not for the Department to undertake that activity. The National Institute for Health and Clinical Excellence, the independent body, issues guidance on the use of such treatments, and that guidance is the subject of a judicial review this week. It is to that independent body that those patients and organisations should make their representations, so that it can make the appropriate recommendations on the use of such treatments.

Graham Stuart: I agree with the Minister that treatments such as these should not be performed on the NHS until independent medical evidence has been obtained to show their efficacy. Will he tell the House how much is spent by the NHS on chronic fatigue syndrome?

Phil Hope: I am grateful for the hon. Gentleman's support for a way of working in the national health service that has widespread support on both sides of the House and throughout the country. I do not have the figures that he requests to hand, but I will write to him in due course.

David Tredinnick: Is the Minister aware that herbal medicines—[Hon. Members: "Hear, hear!"] I have written to him about the fact that, if he does not introduce statutory regulation of herbal medicine practitioners by the time the herbal medicinal products directive is implemented in 2011, there will be no proper regulation whatever. What is he going to do about that?

Phil Hope: I thank the hon. Gentleman for his question. This is a serious issue that many people are concerned about. We will be undertaking a consultation on the future regulation of herbal medicines in the near future.

Child/Adolescent Psychiatric Services (North-West)

John Pugh: How long the average waiting time for accessing child and adolescent psychiatric services in the north-west is.

Phil Hope: Information from the annual children and adolescent mental health services—CAMHS—mapping exercise, conducted by Durham university for the Department of Health and the Department for Children, Schools and Families, indicates that NHS trusts in the North West Strategic Health Authority have waiting times for CAMHS that are better than average. During 2007-08, 91.6 per cent. of new referrals for CAMHS were seen within 13 weeks in the North West SHA area, compared with 87.4 per cent. in all strategic health authorities.

John Pugh: I have a letter from a whistleblower who alleges a serious scandal in the north-west, citing CAMHS waiting lists of one year for serious and complex tier 3 needs, a lack of resources, a shortage of in-patient beds, and looked-after children being dumped in private homes. May I ask the Minister seriously to look further into the information that he has and to check its accuracy?

Phil Hope: I will certainly take away the information that the hon. Gentleman has presented this afternoon and respond to him in due course. I am aware that one of his constituents had to wait 12 months for referral to the children and family services. I understand that Sefton primary care trust is now working with Alder Hey Children's NHS Foundation Trust to introduce waiting time initiatives to ensure that the PCT in the hon. Gentleman's constituency meets the waiting-time targets across the borough. That includes extra temporary staff and introducing "choice and partnership"—a new system for the management and referral of patients. The hon. Gentleman has raised a serious point on the Floor of the House; I will take it away and write to him in due course.

Madeleine Moon: The early intervention of child and adolescent mental health services is as serious an issue in the north-west as it is for the rest of the UK, as failure to access child and adolescent mental health services can lead to long-term mental health problems for youngsters. We know that between 10 and 20 per cent. of young people will have such long-term difficulties, which can lead to suicide, long-term mental health problems and self-medication with drugs and alcohol, so will my hon. Friend agree to look seriously at how we can bring about improvements to child and adolescent mental health services across the UK?

Lindsay Hoyle: This is a north-west question.

Mr. Speaker: Order. The hon. Lady linked her question to the north-west, and she was entitled to raise it. It was a wee bit long for a supplementary; perhaps we could cut the supplementaries down a little.

Phil Hope: My hon. Friend the Member for Bridgend (Mrs. Moon) has raised the concerns in her constituency on many occasions both inside and outside the House. I am grateful and pleased that, so far as I am aware, all of them are not replicated in the north-west. I agree that gaining earlier access to services for children and adolescents with mental health problems is a serious matter. We have undertaken a review of this country's child and adolescent mental health services; funding went up from £322 million in 2003-04 to £523 million in 2006-07, and there has been a significant fall in the number of people waiting, along with shorter waiting times for CAMHS. However, there is more to be done and the Department will make sure that we press forward on these issues because our children and young people deserve the best mental health service that we can provide.

Norman Lamb: How can the Minister justify the fact that someone with a physical health condition will have an operation within 18 weeks of referral from a GP, whereas someone suffering from a mental health condition can find themselves waiting—as my hon. Friend the Member for Southport (Dr. Pugh) said, in the north-west and in many other parts of the country—sometimes more than a year for cognitive behaviour therapy and other NICE-approved therapies, particularly when we know that early intervention is very important in aiding recovery? Is it not about time that we ended this discrimination in the health service—for that is what it is—and ensured that people with mental health problems had an entitlement to access treatment?

Phil Hope: The hon. Gentleman will know that over the next 12 months we are launching the "new horizons" project, which is our strategy to take mental health services forward. He and I have appeared on many platforms together, celebrating the significant improvements in mental health services, as major investment means that we have many more psychiatrists and psychiatric nurses than we have ever had before. The real challenge in front of us, however, is not only to ensure that we maintain that improvement in mental health services, but to challenge the wider stigma and discrimination attached to people who have mental health problems. That means bringing about a cultural shift so that we not only continue to improve mental health services by putting in investment, as we have over the last 10 years, but move forward towards genuinely healthy communities, which means mentally healthy communities. We need to take away and end the stigma currently attached to people who suffer from mental health problems.

Anne Milton: The figures for the north-west are, like those for the rest of the country, truly shocking, with one in 10 five to 16-year-olds having a clinically significant mental health problem, including anorexia, anxiety and depression—one in 10: the numbers are huge. Furthermore the use of anti-depressants on children has increased 38 per cent. over the past 10 years. These shocking figures clearly demonstrate the failure of our child and adolescent mental health services. Although I welcome the Government's attempts to do something about it, the Minister should, to be fair, admit that children and adolescents have been failed over the past 11 years and that we are now seeing the results in the increase in the mental health problems of young adults.

Phil Hope: No, I do not accept that the Government have failed. What I do accept is that there has been a significant increase in funding for children's and adolescents' mental health services, from £322 million in 2003-04 to £523 million—half a billion pounds—in 2006-07. That has produced a fall in the number of children and young people waiting to be seen, and it has reduced waiting times. Nevertheless, there is clearly more to be done. That is why we instigated the review, that is why are setting up a new national advisory council, that is why we are setting up a national support programme, and that is why we are driving forward changes up and down the country to ensure that children and adolescents with mental health problems— [Interruption.] The hon. Lady says, from a sedentary position, "Eleven years". I can remember the 18 years of a Conservative Government who failed to invest a single penny in children's and adolescents' health services.

Topical Questions

Julie Kirkbride: If he will make a statement on his departmental responsibilities.

Alan Johnson: The responsibilities of my Department embrace the whole range of NHS social care, mental health service and public health service delivery, all of which are of equal importance.

Julie Kirkbride: I welcome the Government's campaign to alert people to the symptoms of stroke and to encourage them urgently to seek medical treatment, but what reassurance can the Secretary of State offer that every hospital in the country will be given adequate resources with which to deal with the increase in demand, especially in scanning departments? What guarantees can he give those who may present at hospitals with stroke symptoms that they will be given the timely treatment that they need to ensure that their future health is not impaired?

Alan Johnson: I can reassure the hon. Lady that the 20-year stroke strategy that we set out in December 2007 will be completed. However, there comes a point when there must be a drive to increase awareness along the way, and a debate has been held with the Stroke Association and others about when that should happen.
	As the hon. Lady implies, we are not at the end of the stroke strategy yet, and not every treatment centre has the best facilities that we want to see throughout the country; but the view expressed in the debate was that now was the time to raise awareness and, in particular, to make people aware of FAST—the face, arm, speech test, which paramedics have used for some time. Strokes, probably more than any other illness or attack, require early treatment and a scan within the first three hours: that is essential. One of the main problems is a lag at the beginning because either the person having the stroke or those around him or her do not realise that it is a stroke.
	This is the right time for a public awareness campaign. Meanwhile, we recognise that there is more to be done to ensure that services around the country are uniformly excellent.

Graham Allen: Does the Secretary of State—or the Minister of State—welcome a publication on teenage pregnancy produced by the Nottingham teenage pregnancy taskforce, and will he or she underline the fact that this is everybody's problem? It is not just a health service problem about contraception; it is as much about ensuring that young people have the life skills and the social and emotional capability to enable them to make the right choices when they become sexually active.

Dawn Primarolo: I congratulate my hon. Friend on the leadership that he is showing in his city in relation to young people's opportunities and life chances, and, in particular, on the publication about preventing unplanned teenage pregnancy in Nottingham, of which he gave me a copy last week. In all areas, the important factors are leadership, shared objectives and a clear focus on ensuring that young people are given the sexual health education that crucially influences the choices that they make for the rest of their lives.

James Duddridge: Southend hospital has banned visitors from bringing in flowers on health and safety grounds. Does the Minister believe that flowers present a real risk to patients?

Alan Johnson: The hon. Gentleman raised the issue with me last summer, and I wrote to him about it on 27 June. It is a matter for the local trust. At that time the trust was beginning a consultation, to which I hope the hon. Gentleman contributed, and I understand that it established that there was 75 per cent. public support. The Department does not recommend the banning of flowers other than where they cause particular problems to patients, but we consider that this is an issue for local trusts, and that we should not dictate to them from the centre.

Linda Riordan: Recently, more than a quarter of care homes in Calderdale, which includes my Halifax constituency, were given the lowest two ratings by the Commission for Social Care Inspection. Does the Minister agree that many care homes are more intent on making a profit than on looking after the elderly, and will he tell me what improvements will be made to the standard of care, and what sanctions will be imposed on those who do not comply?

Phil Hope: It is essential that we continue to improve the quality of residential care for older people, and I appreciate my hon. Friend's concerns, but I am pleased to be able to say that the most recent annual report on the state of social care by CSCI inspectors shows the sixth successive year of improvement against the national minimum standards for care homes that we established in 2003. The commission is also taking action to drive up the quality of residential care further. The performance ratings it awards to councils will be affected if those councils only purchase services from care homes rated as poor or adequate. I hope that, together, we will drive up the performance of care homes, so that older people can expect to be looked after with dignity in their retirement.

Andrew Pelling: The campaigning social issues journalist in Croydon, Aline Nassif, has revealed two very worrying cases regarding my constituents. The Mayday hospital accident and emergency department turned away a young mother many times, saying she had depression; she subsequently died from swelling of the brain. There is a very similar story of a young teenager who was also misdiagnosed. While I should, perhaps, have performed the courtesy of advising Ministers before raising this matter in the House, and although Mayday is clearly unable to comment at present as these matters are now under investigation following media coverage, might consideration be given to supporting Mayday, in terms of proper co-ordination and diagnosis at its neurological and accident and emergency departments, while such investigations are ongoing?

Alan Johnson: As often happens in topical questions, we are hearing about things for the first time. I will be very pleased to look into this matter and see whether there is, indeed, a case for Mayday improving its neurological services, and I will also be very pleased to meet the hon. Gentleman to discuss it.

Joan Walley: May I draw the Minister's attention to a scrutiny review that is taking place in Staffordshire of the contracts that the primary care trusts have with the independent sector treatment centre in Burton? People in Stoke-on-Trent by and large do not want to go to Burton for treatment, and they do not want to be cross-subsidising health care at their expense. Can my hon. Friend confirm that the letting of the new contracts will be determined locally by the primary care trusts?

Ben Bradshaw: Not if that means withdrawing from the public the choice that I hope my hon. Friend agrees with us they are entitled to.

David Evennett: Since 1997, almost 800 organs from British donors have gone to people resident outside the United Kingdom. Over the same period, the list of British people waiting for organs has increased by more than 2,400, while only 140 organs have been brought into this country from abroad. Do not the Government need to take some action as this situation is rather shambolic, and does not the Secretary of State need to get a grip on it?

Alan Johnson: We might need to take some action. As I understand it, this matter involves a few hospitals, and NHS Blood and Transplant has not been happy with the situation—its correspondence was leaked to the press over the weekend. The organ donation taskforce has been looking at a number of very important elements of organ donation, but we did not ask it to look at this issue because at the time it was not highlighted as a problem. We might need to do so, however, because the hon. Gentleman raises a serious point: we want to increase the number of people on the register, and if people think they are going on the register for their body organs to be part of some export system, that will not do us any favours in achieving that end, so we need to tackle this, and to tackle it quickly.

Lorely Burt: Will the Secretary of State reassure me that it would not be acceptable for a Labour Government to endorse surplus taxpayers' money from an NHS hospital trust being used to create a private hospital to be run by that trust? Would that not fly in the face of the ethos of the NHS, create a conflict of interests when services are being delegated, and involve taxpayers in the risk if that private venture were to fail?

Alan Johnson: I would like to know the details of what the hon. Lady is describing. My local acute trust at Castle Hill has purchased the private Nuffield hospital and brought it into the NHS—it says that it had to spend lots of money to bring that hospital up to NHS standards, although that may or may not be true. I shall look at the point she raises, because it sounds like it involves a deeper story.

Ben Chapman: Merseyside and Cheshire Cancer Network proposes to move cancer services from Clatterbridge to Liverpool, not on the basis of an objective, transparent and rigorous process or a proper business plan, but because the money is available. Will the Minister meet me and my colleagues, so that we can discuss our objections to both the form and substance of this?

Ann Keen: Yes, I would be happy to meet my hon. Friend.

Patrick Cormack: Is the Secretary of State aware that when I was first elected to this House, almost every GP practice in my constituency offered an out-of-hours service? Despite the dramatic advance in medical treatments and drugs, my constituents receive a much less personal service from their GPs than they did 30 to 35 years ago. Does he agree that that is not progress?

Alan Johnson: No, I do not, and I shall tell the hon. Gentleman why. At the turn of the century, there was a very serious problem with getting medical students to go into general practice. The forecast, given the demography of general practices then, was that the shortage was bad and would become much worse, so something had to be done. Since the new contract, we have given GPs the option to opt out of 24-hour cover, and the vast majority of them—all bar 10 per cent.—have done so, despite the fact that it has meant a reduction in their pay. We have moved from a system where GPs would look at someone at 9 am having only struggled into bed at about 6.30 am because they had been called out through the night—the situation was similar to the long hours that junior doctors worked, which seemed to be some kind of badge of courage. Tired doctors are not good for our health service, and I am very pleased that we have moved beyond that archaic system.

David Crausby: My local newspaper,  The Bolton News, recently reported that a 29-year-old woman in the Royal Bolton hospital was so terrified in a mixed-sex ward with three men that she was forced to sleep in the examination room overnight. Is it not bad enough being ill in hospital without having to deal with the added stress that mixed-sex wards cause men and women? When can we expect to see the end of these wards in Bolton?  [Interruption.]

Alan Johnson: Conservative Members say "After the election", but, of course, before we came into government nobody kept any statistics on mixed-sex accommodation—the most recent statistics showed that the level of mixed-sex accommodation was about 50 per cent. The Healthcare Commission now reports that nine out of 10 patients have elective care in single-sex accommodation. This is not an easy issue to resolve. We have to be sure that there are good medical grounds—for instance, in intensive care units and emergency accommodation—for not being able to operate single-sex accommodation. Beyond that, what happened to my hon. Friend's constituent should not have happened—it is unacceptable. It breaches the dignity and respect of the patient, the emphasis on quality—quality relates to more than just quality of care; it relates to the patient's experience—and our new NHS constitution, which is why I have introduced a £100 million capital fund and I have said that from 2010-11 no acute trust will receive any payment if it gives care unnecessarily in mixed-sex accommodation. I think that will mean the final eradication—I agree that it is taking too long—of mixed-sex accommodation in Bolton and across the country.

Andrew Lansley: Last April, the Secretary of State told the Royal College of Nursing that he was within "touching distance" of abolishing mixed-sex accommodation—nothing happened for nine months. The Conservatives then published the data from hospitals showing the number of people affected by the lack of compliance with the mixed-sex accommodation rules and exposed the Government's failure—nine days later, the Secretary of State announced a £100 million dignity and respect fund. Will he explain why the Government do nothing unless and until we expose the extent of their failure?

Alan Johnson: It is not right to say that nothing happened after the Royal College of Nursing conference. In fact, the week after that conference I wrote to every strategic health authority and made it clear that by the time the RCN next meets I want to see progress in this area. It is true that the operating framework that we planned to get out in July did not, in the end, go out until December, and our announcement about what we would do was made on the back of the operating framework.
	This issue is too important for party political point scoring, because the care and respect agenda is crucial to Members on both sides of the House. All I would say is that the plans that the hon. Member for South Cambridgeshire (Mr. Lansley) has put forward for an increase in single rooms are hopelessly under-costed. He says that they would cost £1 billion, but they would actually cost about £9.5 billion, and he will not be able to afford it.

Anne McIntosh: The Secretary of State recently visited the Vale of York and I am sure that he will have been told that spending per capita in the Vale of York, North Yorkshire and the Humber region is less than in any other region. What is he personally going to do about that?

Ben Bradshaw: As the hon. Lady will know, because I have already told her, North Yorkshire and York PCT recently received one of the biggest increases— [ Interruption. ] Yes, but the funding comes from the PCT. It received one of the biggest increases for the next two years of any PCT in the country—in the top 30 per cent. of increases.

Point of Order

Bob Spink: On a point of order, Mr. Speaker. Given the extraordinary levels of rainfall and the flooding that are occurring today in my constituency and elsewhere, can we expect a statement from Ministers so that we can question them on what immediate action they are taking today and what they can do in the longer term?

Mr. Speaker: That is at the Minister's discretion: it is not a matter for me.

Employment Opportunities

Motion for leave to introduce a Bill (Standing Order No. 23)

Christopher Chope: I beg to move,
	That leave be given to bring in a Bill to introduce more freedom, flexibility and opportunity for those seeking employment in the public and private sectors.
	Two months ago we were celebrating the 60th anniversary of the universal declaration of human rights. Article 23.1 states:
	"Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment."
	Article 6 of the international covenant on economic, social and cultural rights, to which the United Kingdom is a party, states:
	"The State Parties to the present Covenant recognise the right to work which includes the right of everyone to the opportunity to gain his living by work, which he freely chooses or accepts, and will take appropriate steps to safeguard this right."
	It may come as a shock to many Members of this House to know that, currently, many people are not given the rights to work enshrined in those important United Nations articles.
	This is an issue of increasing significance with the advent of the economic depression and the soaring numbers of innocent victims of the Government's gross mishandling of the economy. In Christchurch, unemployment has more than doubled in one year, with very few job vacancies now available. Few would dispute that everything that possibly can be done must be done to create new job opportunities for our fellow citizens. My Bill, by restoring rights to work that have been taken away by this Government, would boost employment.
	The first group that would be helped would be refugees who have sought refuge in this country by reason of persecution and are waiting for the Home Office to determine their applications for asylum. Why should those people not have the right to take employment opportunities that have not been taken up by British citizens and thereby enjoy the dignity of having a job? Although it might cause some raised eyebrows among colleagues to hear this, I am pleased to report that the Trades Union Congress is of the same view.
	The second and much larger group who will be helped by my Bill are those who are currently out of work but would be willing to work for less than the minimum wage, which is £5.73 an hour or £11,918 a year based on a 40-hour week. Our Government make it illegal for an employer and an employee freely to negotiate the level of remuneration if it is less than £5.73 an hour for an adult, unless, of course, the work involved is unpaid voluntary work.
	Before anybody accuses me of wanting to impose poverty wages, let me emphasise that I am talking about arrangements for freely consenting adults. The Government regard an income of £11,918 per year as much in excess of an employee's personal needs. That is why a single person on that salary is required to pay no less than £1,887 in tax and national insurance, thereby effectively reducing their take-home pay to £4.82 an hour instead of the £5.73 that it is nominally.
	Why should it be illegal for someone voluntarily to accept pay of £4.82 an hour? After all, that is all that is left in their pocket if they are paid the minimum wage of £5.73. Giving people the freedom to opt out of the minimum wage would help not only those who are out of work but those in the hard-pressed retail and hospitality sectors where businesses are going down like ninepins. How many such small businesses could be saved if those working in them had the freedom, in conjunction with their employers, to agree to reduce their wages?

Andrew MacKinlay: It would be unfair competition.

Christopher Chope: The hon. Gentleman says that it would be unfair competition, but we are talking about the marketplace and people should be free to compete in the marketplace without restriction. A reduction to, say, £4.82 would be more than 15 per cent. below the minimum wage and would also save employers national insurance on-costs. It could thereby transform the economic viability of such a small business by substantially reducing overheads.
	Voluntary wage reductions are increasingly commonplace in the private sector. I visited a small engineering company in my constituency on Friday where everyone has voluntarily taken a 10 per cent. pay cut. About half the work force have also been made redundant. Workers in other large firms such as JCB and Corus are reported to have done the same to enable their firms to be more competitive and to reduce the overall number of redundancies.
	Such changes are not happening purely in the private sector. In Ireland, Members of Parliament and senior civil servants have taken a 10 per cent. pay cut. I am not asking people to support such a proposition if they give me leave to introduce this Bill, but that example shows the mood in the real world. It is ironic that the only people without the freedom to take a pay cut are those on or just above the minimum wage. How can that be fair?
	We all know that many people are self-employed and earn far less than the annualised national minimum wage for full-time work. They can escape the constraints of the national minimum wage legislation, but not everyone wishes to become self-employed in order to enjoy the right to work. One of the most effective ways of creating new work, in the service sector in particular, is for services to be offered at a price that is attractive to potential customers, thereby creating a new market. We can all think of examples of people who might offer services such as window cleaning, child care, gardening, car washing and so on. Provided that the price is right, the potential employer may take on those people for employment. In the real world, it is accepted by the Low Pay Commission that more than 1 million people are already working at below the minimum wage. Many of them work in what is described as "the black economy". How much better would it be if those private arrangements were not criminalised by the state?
	The right to work covers not only the issue of remuneration but how many hours are worked. I have received letters from constituents who are worried about the potential impact of the loss of the opt-out from the 48-hour week, which was applauded by Labour Members of the European Parliament only late last year. My constituents argue that they should have the freedom to work whatever hours they decide, in conjunction with their employers. What reasonable man could argue with that? Indeed, that right is recognised by the United Nations, even if not by the European Union.
	The final element of my Bill would require all public sector organisations to advertise their job vacancies externally, so that those outside the magic circle would have the freedom to compete for jobs on an equal basis. For example, there are 672 BBC management jobs with salaries of more than £70,000. Are there not many people out there in today's job market who would give their eye teeth just to have the opportunity to compete for those jobs?
	This Bill is about liberalising and deregulating the labour market. It is about removing the barriers to work that have been introduced since the last recession. It is not only an essential supply-side measure; it is also a restoration of that basic human right—the right to work.
	 Question put and agreed to.
	 Ordered,
	That Mr. Christopher Chope, Mr. Peter Bone, Philip Davies, Mr. Nigel Evans, Mr. Greg Knight, Mr. Edward Leigh, Mr. Ian Liddell-Grainger, Mr. Brian Binley, Mr. William Cash, Mr. Robert Syms and Mr. David Wilshire present the Bill.
	Mr. Christopher Chope accordingly presented the Bill.
	 Bill read the First time; to be read a Second time on Friday 15 May and to be printed (Bill 60).

Banking Bill (Money)

Queen's recommendation signified

Ian Pearson: I beg to move,
	That, for the purposes of any Act resulting from the Banking Bill, it is expedient to authorise—
	(1) the payment out of money provided by Parliament of any expenditure of the Secretary of State in respect of, or in connection with, giving financial assistance to or in respect of a bank or other financial institution, and
	(2) the payment out of the Consolidated Fund, in urgent cases, of expenditure which would otherwise be paid under the Act out of money provided by Parliament.
	As the House will be aware, provision for public expenditure in legislation can be considered only if a money resolution authorising a charge to public funds has been passed. Such a resolution was passed by this House at the end of the Second Reading debate on 14 October last year, in the usual way.
	However, as the House will also know from amendments made to the Bill in another place, which we shall debate shortly, the Government found it necessary to have the Bill amended there to provide the necessary statutory cover for expenditure on a wider range of matters than had been thought necessary when the original money resolution was passed.
	In particular, as I shall explain in more detail shortly, it was necessary to make provision for a number of schemes operated by Government Departments that had, as their object, the provision of support in these difficult times for bodies that are not banks or other financial institutions, as well as for banks and financial institutions themselves. We therefore require a new money resolution to approve this extension of the financial scope of the Bill before we consider the amendments that the other place has made.

Mark Hoban: The Minister introduced the money resolution as though it were merely a matter of course and something that should go through without much debate. However, the Bill changed significantly in the House of Lords, which widened the scope of financial assistance beyond what is to be given to banks or other financial institutions. Later, we will discuss the effect that those amendments could have on banks or other financial institutions, on the economy as a whole and on particular industries or sectors, and on actual or potential customers of banks or other financial institutions. Those are broad amendments. They cover a number of packages of aid announced by the Government in recent months. It is important to put on record the estimated cost of those packages, so that the House can understand the scale of the liability that the taxpayer could take on as a consequence of those amendments and the money resolution being agreed to this afternoon.
	In the other place, it was said that the changes required to the Bill would give legislative cover for: the first bank bail-out; the equity and preference share investments in the Royal Bank of Scotland, as well as in Lloyds TSB and HBOS, now Lloyds Banking Group; the credit guarantee scheme; the asset-backed securities scheme proposed by Sir James Crosby in his report, which was presented to the Chancellor at the time of the pre-Budget report; the £50 billion asset purchase facility, a scheme that authorises the Bank of England to buy commercial papers; and the asset protection scheme, the details of which we still do not know, although it will ensure a portfolio of bank assets in return for a fee. There were reports at the weekend that there could be up to £400 billion-worth of eligible assets in that scheme.
	We could add the schemes announced by the other Department that the Minister represents, the Department for Business, Enterprise and Regulatory Reform. They include: the £10 billion working capital scheme, set up to secure £20 billion of short-term bank lending to companies in the small and medium-sized enterprises sector; the £1.3 billion enterprise finance guarantee scheme; the £1.3 billion that is to be unlocked from the European Investment Bank as part of a package of aid to the motor industry; and £1 billion of direct lending to the motor industry. A large financial commitment is emerging as a consequence of the amendments made in the other place.

John Redwood: Is my hon. Friend of my view, which is that we might be talking about half a trillion—£500 billion—of loans and share capital purchases, and another £500 billion of money guaranteed? We could be talking about guarantees, loans and shares of £1 trillion, and all we get from the Minister is about three sentences.

Mark Hoban: Indeed; my right hon. Friend makes an important point. The scale of the financial intervention that could be authorised by the Bill is much greater than many people anticipated, even six months ago. It is important to make sure that there is proper scrutiny of it. I will not trespass on the subject of transparency, and the reporting measures on which the Government have conceded; we will talk about that later. There are significant amounts of money involved, and it is important that before we proceed to discussing the amendments, we put on record the amounts of money involved.

Peter Bone: I was rather surprised at how quickly the Minister sat down; he did not give us an opportunity to question him. If we pass the measure today, will the funds that we are talking about be consolidated on to the Government's balance sheet, as is required under international accounting standards?

Mark Hoban: My hon. Friend, a fellow chartered accountant, asks one of the questions that need to be addressed. As I understand it, there will be different accounting treatments for different types of schemes. Schemes that provide a guarantee will be a contingent liability, whereas in schemes in which we take on debt, that debt will be on the Government's balance sheet. As a consequence of the Government's majority shareholding in RBS, the Government have had to recognise a significant proportion of RBS's liabilities on their balance sheet.

John Bercow: As has been noted, the Minister was swift to resume his seat, whereas my hon. Friend, presumably in a bid to whet our appetites for the debate, has already offered us a litany of statistics. I am all agog: I want to know whether my hon. Friend is advising us to vote against the money resolution.

Mark Hoban: My hon. Friend tempts me, but we have accepted elements of the banking bail-out package. We feel that parts of the package could have been made much more effective at an earlier stage. We welcome the Government's working capital scheme, which was announced by Lord Mandelson, although it was a pale imitation of a policy that we proposed in November. So although elements of the package may cause controversy, there are elements on which the Government have followed our lead. The important thing is that we hold the Government to account on how the schemes are introduced and implemented. We will refer to ways in which we can do so in the debate on the first group of amendments.
	It is difficult to speak of a backdrop in the first debate on a topic, but it is important that hon. Members who wish to participate in the debate on the Bill recognise the cost of the initiatives that the Government have taken already, the potential exposure that that brings to the taxpayer, and the need to ensure that taxpayers are fully aware of the liabilities that they are likely to bear. I, too, was surprised that the Minister was so quick to resume his seat. He announced in the House at least one of those packages, if not two, and I should have thought that he would be happy to talk about their merits and why they would be effective.

William Cash: Will my hon. Friend give way?

Mark Hoban: I am conscious that other hon. Members wish to participate in the debate, but I shall give way to my hon. Friend.

William Cash: A subject that I have been pursuing since at least 7 October is what is a proper measure of the percentage of gross domestic product represented by the debt—it is somewhat along the lines of the remarks made by my hon. Friend the Member for Wellingborough (Mr. Bone). My hon. Friend the Member for Fareham (Mr. Hoban) correctly referred to contingent liabilities as the proper criteria. However, surely the real criteria should be the financial obligations that are entered into. Nobody could seriously doubt that we are speaking of financial obligations, so whatever the measure that may be imposed by virtue of a theoretical definition, the fact is that the figures are up to £2 trillion to £2.5 trillion, as I said in the most recent debate. Does my hon. Friend agree that we need to work that out carefully so that we get a proper measure, not just a theoretical measure, of what is defined?

Mark Hoban: My hon. Friend makes an important point about trying to quantify the extent of the liabilities that the taxpayer is taking on. Dredging the recesses of my memory, I recall from my accountancy training that there are accounting standards that examine the extent to which a potential liability could crystallise and therefore how one should account for those liabilities. What is more likely to transpire should be provided for, and what is less likely to transpire should not be provided for.
	Part of the challenge that we face is that one of the potentially largest elements of the package is the asset protection scheme, which will insure a portfolio of bank assets. Work is going on to try to quantify the extent of the package and what guarantees the Government will enter into with the banks, so we are yet to find out the true scope of the commitments that we are likely to enter into on behalf of the taxpayer in trying to resolve some of the issues associated with the banking crisis.

Brooks Newmark: Building on the point that my hon. Friend the Member for Stone (Mr. Cash) was making—

John Bercow: The thesis!

Brooks Newmark: It was not a thesis, but it was a very good point about contingent liabilities. Equity accounting rules say that if the Government own more than 50 per cent. of a bank or any institution, they should consolidate not just a portion—that is, 70 per cent. of the debt—but 100 per cent. of the debt. Does my hon. Friend agree that if we want transparency, the Government should consolidate 100 per cent. of the debt of anything that they own over 50 per cent.?

Mark Hoban: My hon. Friend, who has made a great study of the state of Government finances and their on and off-balance sheet liabilities, tempts me down a course which, if he does not mind, I shall not tread at this point. He makes an important point about the extent to which the Government may wish to recognise the liabilities. We are speaking of the liabilities of not just one bank. The Government have nationalised two banks—Northern Rock and Bradford & Bingley—so their liabilities will need to be taken into account as well. In the interests of transparency, we have heard nothing about the condition of Bradford & Bingley since it was nationalised at the end of September. That will be referred to later, in the debate on Lords amendment 83.
	I give way to the hon. Member for Thurrock (Andrew Mackinlay).

Andrew MacKinlay: I shall make a substantive speech.

Mark Hoban: I do not wish to get in the way of the hon. Gentleman's making a substantive speech. It will be good to hear comments from Government Back Benchers, but I am sure that the hon. Gentleman will agree that there are significant sums of taxpayers' money involved and it is right to have a proper debate about it not only now, but as the scale of the liabilities unfolds over the coming months. Not wishing to deprive other hon. Members of the opportunity to speak, I shall conclude my remarks there.

Andrew MacKinlay: I am pleased to have caught your eye, Mr. Speaker. I am a bit bewildered and concerned that countless Members of Parliament from all political parties will be responding to letters and representations from constituents about the bonuses being paid to people who presided over the banks that have failed. That issue is fully within the footprint of the resolution, which involves Parliament authorising moneys to fulfil the intentions of the Banking Bill, which is designed to bail out and underwrite the banks.
	It is inconsistent for us in this Parliament to agree this money resolution when the Prime Minister has failed to ensure that bonuses are not paid to people who have failed both the banks and the wider United Kingdom community. In my view, the money resolution should be contingent on an undertaking that the banks will not pay the bonuses or that the Government will enact legislation to ensure that those payments are not made. I find it bewildering that neither the Opposition spokesperson nor the Government Front Bencher has mentioned the big elephant in the room—that is, the bonuses being paid. At the same time, we are expected to vote this afternoon—

Mr. Speaker: The money resolution does not involve a debate about bonuses. Perhaps the hon. Gentleman can raise that issue at some other point in the proceedings.

Andrew MacKinlay: I fully accept what you say, Mr. Speaker.

John Redwood: Does the hon. Gentleman agree with me that the consequence of this money resolution is that the House has to supervise a big bank with a medium-sized country attached—a £2 trillion bank and a £1.5 trillion country? That is why the hon. Gentleman is in difficulties.

Andrew MacKinlay: Maybe. We are being asked to authorise this expenditure by Parliament; it is Parliament's historic role to make moneys available to the Government. I was inadequately trying to make the point that it would be wrong for me, on behalf of my constituents, to acquiesce, by my silence, in this authorisation of payment just when the Executive branch of the Government, these Ministers, are not ensuring that the rights and interests of our people are protected and promoted to the fullest extent; I am thinking about making sure that the bonuses are not paid to the failed bankers.
	I conclude by saying that I am not prepared to let the motion go through without making it clear that it should be a condition of the resolution that the Prime Minister comes to the House to say something about the payments. I am not talking about setting up reviews; reviews that take months are no good—particularly if they are conducted by a man who received bonuses. Working-class people do not receive bonuses, and earlier we debated a Bill about rights to work. It is now time that Parliament exercised its right, and I am tempted to divide the House on the issue. I hope that the Whips are listening in their offices.

Colin Breed: This morning, the Treasury Committee spent about three hours interviewing bank executives. Part of the reason for that was our incredulity at how they had made decisions based on information about very complex financial instruments, which we suggested they did not know enough about before they committed huge sums to buying various assets and lending money in a certain way. We suggested to them that perhaps they should have had better training and education so that they could have understood exactly what they were approving.
	Now we find ourselves here this afternoon. The Minister has made a statement lasting two or three minutes and is asking us to approve something, although many of us have not got the foggiest idea what it is to fund.

Andrew MacKinlay: Bonuses.

Colin Breed: It could well be bonuses. Some of it will be in actual cash, by way of loans; some of it will be by way of guarantees and indemnities; and some of it will be by way of stand-by facilities. However, we do not know what the estimated total exposure at any one time might be. We do not have much idea of what the underlying security might be. We have not been provided with a cash flow forecast to indicate what the peaks of this exposure might be. We do not appear to have any exit routes for how the money will be paid back, in what time scale it will be paid back, or whether it will ever be paid back. There seem to be no dates by when these facilities will no longer be available, how long they will be made available for, or what review periods will be undertaken to ensure that the cash flow forecast is on track, or not on track. Combining all that with the opaqueness of the Government's own accounts as regards their off-balance sheet items and suchlike, we have no idea whatever of the total exposure that the Government are suggesting we should agree with taxpayers' money.
	To debate all that we have three quarters of an hour, most of which has now gone. We have to decide what could be an unbelievable amount of exposure. As the right hon. Member for Wokingham (Mr. Redwood) said, it could be £1 trillion; we just do not know. I cannot conceive how we could possibly approve it today without a significant amount of additional information so that we have at least some idea of what is involved. If somebody gets us in front of a Committee in a year or so and says, "When you approved it, did you understand what it was all about?", we are going to look rather foolish.

Stewart Hosie: I am almost tempted to suggest that it is worse than that. One of the component parts of this money resolution is the Government's insurance for the banks' excess bad debt, effectively covering the toxic debt, which is a moveable feast—it is completely open-ended. Is it not worse than the hon. Gentleman describes in the sense that debts, or loans, that are good at the moment can become bad as the recession worsens, making this a completely open-ended commitment to an unmeasurable liability?

Colin Breed: I thank the hon. Gentleman for that. He is exactly right: it is worse than I was thinking. If we discussed it for another half an hour or hour, we might discover that it is even worse again.
	Most money resolutions are relatively straightforward—I think we all accept that—but this is entirely different. We should not just pass it and get on to the Lords amendments, because it is fundamental to the whole question of our bailing out the banking system. Unless we fully understand what the exposures are, this House will not be doing its fundamental task of oversight.

Graham Brady: I am following the hon. Gentleman's remarks with care. Does he agree that there is a marked contrast with the situation in the United States of America, where not so many months ago the Treasury Secretary went on his knees in front of Congress to seek permission for that money?

Colin Breed: There is a certain similarity, of course. Althouh I do not want the Minister here, or anybody else necessarily, on their knees, when they come to the Dispatch Box they should at least give us a much fuller understanding of exactly what we are being asked to do.

William Cash: Is the hon. Gentleman aware that the Japanese bankers went on their knees to apologise for the mess they got the Japanese economy into?

Colin Breed: They may have chopped their heads off as well—I do not know.
	Perhaps the Minister will be able to explain exactly what he wants us to approve, what amounts and so on, because at the moment I, for one, am not very happy.

John Redwood: This is the biggest, most important and most dramatic money resolution I have ever seen in the House of Commons. It has taken 1,000 years to amass a debt that the Government put at around £550 billion. Under this money resolution and the associated actions that the Government might take, they might double the debt by making that amount of money available as loans and share capital to banks or put the same amount again at risk through their loan guarantee scheme. As my hon. Friends have indicated, if we consolidate on the general balance sheet, as we should, all the assets and liabilities of the banks that the Government are buying, we do not just double the debt but quadruple or even quintuple it when one takes into account the full size of RBS, Northern Rock and Bradford and Bingley—no others, we trust, but this is very open-ended and implies that there could be others.
	The money resolution takes the form of two different assertions. First, we are invited to give the Secretary of State power to put out money provided by Parliament under these headings, and secondly, in urgent cases, to authorise payments to be made out of the Consolidated Fund. The Bill that backs up the money resolution contains even more wide-ranging powers relating to the central bank, enabling quite a lot of money to be generated by the bank through quantitative easing and the manoeuvres of its own balance sheets, so the process is literally open-ended. We have absolutely no idea how much is involved.
	I was disappointed because I wanted to intervene on the Economic Secretary. He gave the impression of a Minister who was going to make a serious and sensible statement about this weighty issue, but he sat down as soon as he saw me trying to intervene and before he had mentioned a single figure. Call me old-fashioned, but if I were moving a money resolution in the House of Commons, even one for a modest sum of money, I would mention the sum involved and explain why I thought it would provide good value. We have a money resolution that could involve half a trillion or a trillion pounds. On a consolidated basis, if we take all the liabilities into account, it could be several trillion. We might think that it was worth giving a few numbers, or at least some kind of ceiling to suggest that the Government understand that we are talking about big banks in a relatively small country.

Brooks Newmark: Does my right hon. Friend share my concern that the Government do not know the answer because they have not had the time to do their own due diligence on the exact amount of risk to which they are exposing the country and taxpayers? That is why we are now on our second bail-out, and my concern is that we may end up having a third two or three months down the road.

John Redwood: I quite agree. I do not know whether the figure of £37 billion is retrospective, or whether the Economic Secretary thinks it was voted for under some other provision. We know, however, that £37 billion of equity capital was put into banks just a few months ago. The money changed hands only comparatively recently because it took quite a long time to get the approvals and do the final detailed negotiation. In the case of RBS, we believe that £20 billion went in one week, and the following week it announced it had lost the lot and a bit more besides. Again, call me old-fashioned, but I do not feel I got a lot of value out of that £20 billion, and I wonder why the Government put it in in the way they did, why they did not ask a few questions about the future results before they chose a price to put in new share capital, or why they put in new share capital at all, instead of using guarantees and short-term cash loans, which would have been quite sufficient.

Peter Viggers: To give a sense of perspective about the size of the amounts involved and the speed with which figures can change, on 13 October the Chancellor of the Exchequer told us that the assessment made on the money going into the banks at that point was a cautious one—the FSA had made it on a cautious basis—so the amounts involved were rather larger than might otherwise have been the case. Three months later, on 19 January, RBS had to write off £28 billion, which is the largest amount ever written off by a company.

John Redwood: That is right, and some of us have urged the Government in the past to show a little more concern for the public money involved, to ask more questions and do a little of what is called due diligence in the private sector before committing such huge sums of money to get a better deal for the taxpayer, if they feel that they need to do such a deal at all.
	I urge the Economic Secretary, when considering the money resolution, to ensure that next time—I fear that there will be a next time because the Government are looking at a second package of banking support measures—the Government at the very least try to find out the scope of the problem. They should ask what the next set of figures might be. They should take that into account before valuing any share capital or loan capital they intend to put into the bank, and they should understand that a medium-sized country with an annual turnover and national income of £1.5 trillion will find it difficult to stand behind all the London-based banks with their combined multi-trillion-pound balance sheets.
	If the Government are not careful, they will undermine the credibility and the reputation of their own debt and public finance by linking themselves too strongly and closely to some large banks, three of which we know have been badly run and have committed themselves to big risks and to big bonus and other contingent payments for no good reason, which have landed the taxpayer with a very big bill owing to the Government's policy.
	I know that others wish to speak. It is a pity that we do not have a three-hour debate on the biggest sum of money ever voted on in the history of Parliament, but I do not want to detract from colleagues' time. I have made my main points: the Government should show more care, they should provide us with some numbers and they should understand that the total sum involved is too big.

Richard Shepherd: My right hon. Friend the Member for Wokingham (Mr. Redwood) said, "Call me old-fashioned". I am old-fashioned, as I believe most Members probably are, in the sense that I believe it is not unreasonable to want to know what liabilities one is entering into, or leastways to hear figures suggesting what those liabilities might be. "Due diligence" is a phrase that echoes through almost every transaction in the commercial world.

Robert Smith: One problem is that due diligence did not happen in the commercial world when it came to our banks. The lesson for the Government is that they need to be much more wary when dealing with the banks.

Richard Shepherd: That is a very fair correction. Of course we all accept the need for due diligence from those who serve us, professionally and otherwise, in the commissioning and undertaking of the tasks ascribed to them.
	This country is clearly frightened. What is happening is without precedent in living memory. Unemployment is growing at an alarming rate, and we are watching companies fold. We know that the liquidity of banks lies behind that. We have already had what I believe was a 90-minute debate on a resolution to make available £40 billion and a further £200 billion. The House has been marginalised in the undertaking of its most fundamental duty, which is the supply of money. We do not know how much we are to supply on this occasion.
	I go along with my right hon. Friend the Member for Wokingham in saying that the motion is open-ended, and I am surprised he believes that the Government will even need to return to the House with another such motion. It is pretty comprehensive, yet we know nothing of the figures. The hon. Member for Thurrock (Andrew Mackinlay) asked why we are approving the sums that we are, because they must give bankrupt banks the ability to pay bonuses they would otherwise not be able to pay. Last Thursday, the  Financial Times set out the Obama programme for convincing the public why the measures being sought through Congress, which will sit at weekends if necessary to discuss them, should apply to the banks. That programme rests on a condition similar to the one that the hon. Gentleman set out.
	Yet this Government have set as their condition the holding of an investigation, which will dribble on until the end of time. How can people be confident that the Government know what they are doing, are on the side of the people and can countenance the payment of such sums? Where in their scheme is correction provided for? The Minister must say more about that. It cannot be reasonable to assume that the House will dance to a tune that it does not even understand. The resolution opens our imaginations to the thought that the Government are as lost as all of us. In fact, they are more lost, as they cannot put a sum on anything.

William Cash: Does my hon. Friend accept that some of us would be very concerned if we did not put down a marker of protest about this? We would prefer to vote against the money resolution, even though we understand that certain undertakings may have been given.

Richard Shepherd: I want to see Parliament at the centre of what this country decides in relation to the Executive. That has happened throughout our history, and we are elected to ask the Executive for certain informations. We have been hollowed out in the great debate that faces each of our constituents, and we have not even had proper debates on the Government's economic conduct. They do not want to come to the House to discuss that; they just send a little message, a three-minute speech by the Minister explaining why it is essential that we should bounce along to their drumbeat.
	No, no—I agree with my hon. Friend the Member for Stone (Mr. Cash) that we should oppose the motion so that the Government take seriously the intent of Parliament. Each one of us must justify such vast sums, which could bankrupt the nation. The bankruptcy of countries is not unknown in history. When one hears of money simply being thrown around, without ascertaining or establishing conditions, it makes one feel that the Government do not know what they are doing apart from pushing money into the economy somehow. We need to be more intelligent about the matter, and so do the Government.
	The Executive are trying to achieve what all hon. Members want—the stabilisation of an economic crisis and beginning of life again. However, that should be done in partnership, so we should oppose the motion.

Peter Bone: It is a great pleasure to follow my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd), who speaks with immense sense and with whom I entirely agree.
	I had the great pleasure of attending every Committee sitting, where the Economic Secretary, who is also at the Dispatch Box today, would spend five, 10 or 15 minutes discussing some sentence in the Bill. However, when it comes to spending so much money that we do not even know the size of the sum, with the danger of bankrupting the British economy, we get a very short speech. I do not believe for one moment that that was by the Minister's design—I think he was sat on from on high. The theory is, "Whatever happens, let's not discuss the Bill but simply get it through quietly; let's spend billions and billions of pounds, and nobody will notice." I spoke in a debate in which we spent £42 billion in 90 minutes. The larger the amount of money, the less time we have to discuss it.

Brooks Newmark: Does my hon. Friend share my concern that the Economic Secretary is mute on the matter because he does not know the figure?

Peter Bone: I am grateful for the intervention because I intend to be brief to allow the Economic Secretary time to say at least something about the matter. Perhaps he has no idea about the figure, but he has got to do better. He must come to the Dispatch Box and explain the money resolution in greater detail, otherwise I will not support it. I know that that creates some difficulty for my hon. Friend the Member for Fareham (Mr. Hoban). He made many of the points that hon. Members of all parties have raised, but he wants to get the Bill through, as we all do. However, if we continue to allow the Government to railroad Parliament, they will be encouraged to do it again and again.

William Cash: Will my hon. Friend take into account the fact that our presence here today to discuss the money resolution must be in accordance with the rules laid down in "Erskine May" and in Standing Orders? We are discussing a proposal for new or increased expenditure, which is not already covered by legislative authorisation. We are therefore in a de novo situation. My right hon. Friend the Member for Wokingham (Mr. Redwood), and my hon. Friends the Members for Aldridge-Brownhills (Mr. Shepherd), for Braintree (Mr. Newmark) and for Gosport (Sir Peter Viggers) have already shown that there is deep concern about the fact that the amount is new and increased, and, as my right hon. Friend the Member for Wokingham said, its implications are stupendous.

Peter Bone: My hon. Friend speaks with great clarity and is, of course, correct. Time and again, the Executive have performed the same trick. They add things to Bills late in their passage. In this case, they are adding the most massive sum of money.
	I realise that I am short of time if I want the Economic Secretary to speak again, and he must make it clear whether we are considering approving expenditure of not only billions but trillions. Will that be incorporated into the Government's balance sheet? If so, we will be a little country run by a big bank. The Economic Secretary must be clear: will the money be consolidated or not?

Peter Viggers: The proposal that the Government have put before us is profoundly worrying. It would allow an unlimited amount of expenditure, by authorising
	"the payment out of money provided by Parliament of any expenditure of the Secretary of State in respect of, or in connection with, giving financial assistance to or in respect of a bank or other financial institution".
	That is, in fact, a blank cheque.
	In January, the Prime Minister expressed surprise and anger that the Royal Bank of Scotland had invested in derivatives—"invested" being a pejorative—and that it had become necessary to write off £2.5 billion of taxpayers' money, which was irrecoverable from a Russian oligarch. What on earth are we doing surrendering taxpayers' hard-earned money to a Russian? The Prime Minister expressed anger, but how much more angry should we be that he spent taxpayers' money on that basis and that he then expressed surprise?
	The only way ahead must surely be to tie down the Government, so that they are not so profligate in the expenditure of our money, and to reject the motion. Having said that, I was present when my hon. Friend the Member for Tatton (Mr. Osborne) gave an undertaking that the Bill would go through with our support in February, and on that basis I will not be voting against it.

Ian Pearson: With the leave of the House, I would like to respond to some of the points that have been raised in this debate, although I appreciate that this gives hon. Members an opportunity to range relatively widely over Government expenditure.
	A number of the issues could have been raised in connection with the money resolution on 14 October, which was passed without debate. Indeed, hon. Members will be aware of the convention with regard to money resolutions. Like the hon. Member for Aldridge-Brownhills (Mr. Shepherd), I, too, am old-fashioned.

William Cash: Will the Minister give way?

Ian Pearson: If the hon. Gentleman will let me reply first, I will then give way.
	I am old-fashioned enough to believe that a money resolution is about providing the cover for expenditure. We are not debating or voting on the expenditure itself. That will happen through the normal process of supply estimates and votes where appropriate. There will be opportunities to discuss the expenditure that the Government are committed to, but we are asking for cover for expenditure, just as we do for other Bills in normal circumstances.

William Cash: Will the Minister give way?

Ian Pearson: Let me make just a little more progress and answer some of the substantive points that have been made. Then I will give way to the hon. Gentleman.
	The schemes covered by the resolution will be subject to the standard arrangements for parliamentary control and for the reporting of expenditure to Committees as appropriate. The Bill makes that happen and will also put in place additional requirements, in line with amendments made in the other place. Hon. Members will be aware that amendments made in the other place imposed a requirement on the Government to report on expenditure and liabilities made or assumed under the Bill. We have accepted the principle behind that amendment and we will debate it in due course, so there will be no lack of transparency on the Government's part.

Andrew MacKinlay: Does the Minister not understand his and my constituents' bewilderment that we should be giving the banks a blank cheque, as other hon. Members have said? We understand the gravity of the situation but, at the same time, he and the Prime Minister are not insisting that bonuses should not be paid. I ask him again: will he cut away the nonsense about a review and say, "It shall not happen"?

Ian Pearson: I hear what my hon. Friend says. We all share the public outrage about bonuses that are rewards for failure. Let me say to him that it is not a blank cheque that we are asking people to support today; it is a money resolution that is prepared in the normal way. There will be scrutiny through estimates and votes in the normal way. It is also important to recognise that there are a number of measures in the Bill that are important to people and businesses in his constituency. That is why I hope he will not want to vote against the money resolution, because not passing it would prevent people and businesses in his constituency from receiving substantial support.

John Redwood: Will the Minister give way?

Ian Pearson: In a moment. I just want to address the point about contingent liabilities.
	As hon. Members will be aware, Departments are required to note contingent liabilities in their annual resource accounts. In exceptional circumstances, this may be done confidentially to the Chairs of the Public Accounts Committee and departmental Select Committees. In a moment, I hope we will go on to discuss the transparency and reporting amendment that I have tabled in response to the amendment made in the Lords. It proposes six-monthly reporting requirements. We are not hiding away from wanting to report on our liabilities and the actions that we are taking on this matter; we want to get it right, but we also want to do whatever it takes to maintain stability and support for the economy in this difficult time.
	I am pleased with the cross-party consensus that we have had during the passage of the Bill, and I ask hon. Members seriously to consider that there is a difference between a money resolution that provides cover for expenditure and a debate on the expenditure itself, which will be held in the normal way.

John Redwood: Will the Minister tell the House how much money we are talking about for this year and next, under this money resolution and the subsequent resolutions?

Ian Pearson: We have explained this, in our previous statements to the House on bank recapitalisation, and in our announcements on the asset purchase scheme. We also explained in detail the fact that we were providing £10 billion in contingent liabilities for supporting the working capital scheme, which will allow £20 billion of lending. However, we do not know what the exact figures will be because, in many cases, we are providing loan guarantees, and our final liabilities will depend on the ability of companies to get through the recession and on whether those guarantees are called. The sooner we act, and the sooner we can get more support to businesses, the more likely the businesses will be to survive at this time—
	 Three quarters of an hour having elapsed since the commencement of proceedings on the motion, the Speaker put the Question (Standing Order No. 52).

The House divided: Ayes 273, Noes 7.

Question accordingly agreed to.

Banking Bill (Programme) (No. 4)

Motion made, and Question put forthwith (Standing Order No. 83A),
	That the following provisions shall apply to the Banking Bill for the purpose of supplementing the Orders of 14 October 2008, 26 November 2008 and 17 December 2008 (Banking Bill (Programme), Banking Bill (Programme) (No. 2) and Banking Bill (Programme) (No. 3)):
	 Consideration of Lords Amendments
	1. Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption at this day's sitting.
	2. The Lords Amendments shall be considered in the following order, namely Nos. 83, 1 to 82, 84 to 97.
	 Subsequent stages
	3. Any further Message from the Lords may be considered forthwith without any Question being put.
	4. The proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.— (Mr. Blizzard.)
	 Question agreed to.

Banking Bill

Consideration of Lords amendments

Madam Deputy Speaker: I must draw the House's attention to the fact that privilege is involved in Lords amendments 20, 51 to 53, 59 and 75 to 84. If the House agrees to any of these amendments, I shall ensure that the appropriate entry is made in the  Journal.
	After Clause 226

Transparency: financial assistance

Ian Pearson: I beg to move, That this House disagrees with Lords amendment 83.

Madam Deputy Speaker: With this it will be convenient to take the following: Government amendment in lieu of Lords amendment 83.
	Lords amendments 75 to 82.

Ian Pearson: Before addressing in detail the amendments made in the other place and the amendment the Government are now proposing, it might help if I summarise the purpose and history of clauses 228 and 229 in the latest print of the Bill. Their purpose is to put the use of public money in the proposed bank resolution arrangements, or in the provision of financial assistance to banks and their customers more generally, on to a proper statutory footing. Clause 228 does that by providing the statutory cover for expenditure in Supply estimates. That is required under a long-established convention, commonly called the PAC concordat of 1932, that there should always be specific enabling legislation to enable the finance for a new service to be provided from public funds. We amended the clause in Committee in this House to give statutory cover for financial assistance where the institution concerned was not a UK deposit taker or a financial institution that was not a deposit taker—for example, a bank holding company—but further issues came to light that had to be dealt with by Government amendments in the other place. I briefly commented on them in the money resolution debate, and I shall turn to them shortly.
	Clause 229 provides statutory cover for drawing money from the national loans fund to make loans urgently where that is necessary to protect financial stability. We also amended the clause in Committee to extend the types of person to whom loans could be given to cover financial institutions other than UK deposit takers. I shall also talk about the Government amendments made in the other place after discussing clause 230. This clause, the result of the passing of amendment 83 in the other place, provides for more rapid detailed reporting of financial assistance given to banks, financial institutions and their customers. It provides for quarterly reporting of expenditure, and of guarantees and similar commitments that might result in expenditure, met with money voted by Parliament under the authority of clause 228(1). Clause 230 also provides for the same reporting arrangements for loans made under clause 229. It requires the Treasury to lay sufficiently detailed reports before both Houses of Parliament, but allows for the disclosure of the information to be delayed as long as there is a public interest in not disclosing it.
	The Government have always appreciated the concerns that many people have about transparency and reporting. Those are important issues for the whole Bill, and not just in relation to public expenditure, and we discussed them at great length in Committee and they were discussed at great length in the other place. The Government's view is that it is necessary to balance the desirable objective of transparency against the need for confidentiality in a number of contexts. There will be cases where action to tackle financial crisis, taken under the Bill or otherwise, can be effective only if it can be kept confidential.

John Redwood: If we approve the Bill as it stands, is there a danger that because there will no longer be a weekly report from the Bank of England, some of this assistance could be provided on the Bank of England's balance sheet to avoid all scrutiny and accountability?

Ian Pearson: I shall discuss those points, but basically the answer is that we have the balance right in what we are proposing today.
	The right hon. Gentleman will remember that there were concerns about this precise issue when the news about Northern Rock first broke. There were concerns that the provision of financial assistance by the Bank of England had to be disclosed by the recipient firm—as is the case for listed companies—under Financial Services Authority rules. There were also concerns about the way in which the publication of the weekly Bank of England return could be used to work out that such support was being given. Indeed, clause 244, which removes the obligation on the Bank to produce a weekly return—the right hon. Gentleman referred to that—was included in the Bill precisely because of those concerns.
	So there must be a balance between the need for transparency and the need to protect confidentiality where it is clearly in the public interest to do so. The Government feel that the original clause 230, although a noble effort, does not quite get the balance right. We simply feel that there is too big a risk that it could be possible to identify the beneficiaries of financial assistance under some schemes or the amounts that they could receive. I am sure the House will appreciate the risk, therefore, of damaging speculation about the identity of the institution concerned. That could be bad for confidence and it could even lead to the kind of situation that we are all trying to avoid.
	These issues were debated in Committee in another place, and the version of the clause accepted on Report in the other place has gone some way to recognising these difficulties. For example, clause 230 does allow the Treasury some leeway to delay the disclosure when it is in the public interest to do so—for as long as that remains the case. That is sensible, but because of the risks and concerns that I have just described, the Government might well end up relying on this public interest exemption rather too often.
	That is bad for two reasons. The first is that it increases the chance that the Government may not be able to make a disclosure—that is clearly bad for transparency and we ideally want to avoid it. The second is that the frequent delay or omission of information could, itself, lead to destabilising and damaging speculation of the kind that we all want to avoid. So we have been considering ways in which regular reports of the kind provided for by clause 230 could be made while minimising the problems that I have described.

William Cash: Does the Minister accept that normally the money resolution authorises, in general terms, the expenditure and that subsequently, as he said, there is an estimate, but it is not, in itself, a reason for accepting the money resolution? Does he also understand that much of the reason for the Bill's being discussed and voted upon by an unelected Chamber—the other place—is the fact that the Government imposed restrictions on the amount of debate to take place in this House and abrogated to the upper House matters that should properly be dealt with only in this House, because we are elected on behalf of the people?

Ian Pearson: Unfortunately, I do not agree with hon. Gentleman. Exceptional events have been taking place in money markets worldwide, and the Government have had to act quickly to ensure financial stability. We did that through recapitalisation, and the authorisation for that was in the money resolution that we passed in October. We have had to take further action since, and we need legislative cover for the action that we have taken, which is why we were discussing the money resolution. But we also want to ensure transparency and accountability to Parliament. I share with the hon. Gentleman the strong view that accountability for these matters should be to this House, and we are trying to achieve a reasonable balance between the need for transparency and the need for confidentiality. That is why we have tabled an amendment containing a new clause to take the place of clause 230.
	The new clause would provide that reports should be submitted half-yearly rather than quarterly. In itself, that would significantly reduce the risk of identification as expenditure incurred or guarantees given over a longer period would be covered in any one report. The new clause would require the Treasury to ensure that individual recipients and the amounts that they have been paid or guaranteed cannot be identified. That will usually mean aggregation, and we expect that in practice each scheme would be reported on separately, but that, if necessary, data on schemes could be aggregated up to the level of the sponsoring department. The Government believe that that is the intention behind subsection (2) when taken with the recognition of the public interest in subsection (3), and our amendments are, therefore, in line with the clause as it stands, but make improvements in clarity and technical effect.
	There are also some smaller points on which the Government propose changes to clause 230. First, the amendment provides that the reports should not include the loans made under clause 229. A Government amendment in the other place, which we will come to shortly, made the loans from the national loans fund under clause 229, which can also only be made when needed urgently to protect financial stability, subject to an ad hoc reporting procedure similar to that provided in clause 228 when money is taken directly from the Consolidated Fund in urgent cases. But there is no mechanism analogous to estimates for approving loans from the national loans fund, so there is no need to include them in reports under clause 230. Of course, those payments and loans will be included in the annual accounts of the national loans fund.
	Finally, the amendment provides for reports to be laid only before the House of Commons. That is entirely normal, and follows the usual processes for reporting on public expenditure, in line with long established constitutional precedents in relation to public finances. As set out each year in the Queen's Speech, Supply estimates for the public services are laid before this House only. The reports that this amendment will introduce relate to money voted in those estimates, and it is proper, therefore, that they should be formally laid in this House. But the reports will of course be published so copies will be available to members of both Houses—and indeed the general public—in the normal way.
	I hope that the House will agree that these proposals strike the right balance between the objective of transparency and the need for the appropriate level of confidentiality. I hope that the additional arguments that I have been able to make will enable those who expressed concerns in the debate on the money resolution to be reassured about the accountability mechanisms that will be built into the process.

Derek Twigg: My hon. Friend makes an important point. There is great outrage about bonuses being paid by banks, and it is felt that we should do more about that, given the amount of money being put into the banking system. The key is transparency. While I understand the thrust of the amendments, there is a conflict between transparency and the confidentiality that is needed for the reasons that my hon. Friend has outlined. Does he agree that we must make it clear to our constituents that transparency is a key part of the proposals?

Ian Pearson: I agree strongly: it is right that we should be as transparent as we reasonably can, while recognising that certain public policy objectives require some degree of confidentiality. The last thing that we would want to do is create a run on a financial institution by being too transparent and disclosing problems when by taking action as we propose, we could solve such problems.

Peter Bone: I remember the debates in Committee over this point. One of the dangers of not having transparency is that someone might invest in an organisation, only to lose a lot of money later because it went down, and they would not have known that the Government had been bailing it out in between those times. However, I want to ask the Minister whether we will have an extraordinary Supply day to cover the estimates that we have just approved in the money resolution. If so, will he guarantee that the time allowed for that will not be three hours but will be enough to ensure that the subject is properly debated?

Ian Pearson: I cannot speak for the business managers of the House, obviously. However, as part of the normal reporting procedures there will be an opportunity to debate these matters. The hon. Gentleman has raised his point and he will have ample opportunities to raise the Government's programmes in debates on the Floor of the House and in Westminster Hall.

Jim Cousins: May I put three examples to my hon. Friend? Let us say that the Bank of England were to start buying Government debt; that the Treasury were to start issuing debt directly to businesses, institutions or arms of local government; or that the Government were to decide that they had to support credit insurers and created a new credit insurance facility in order to keep business moving. Those matters would all be covered by this new clause. How would Parliament be kept informed about these matters?

Ian Pearson: As a Government, we always want to be open and transparent. As an experienced Member of this House, my hon. Friend will know that when we make major decisions as a Government it is normal practice that we report them to Parliament either through an oral statement or a written ministerial statement. The normal financial accountability mechanisms will be considered and will be debated in due course. I assure him that the Government want to be absolutely clear about what we are doing and to explain why we are taking action. We think that it is vital that we should continue to do all we can to ensure the stability of the financial system in the UK. That is why the announcements that the Chancellor made in an oral statement to the House a few Mondays ago showed the normal practice that we would follow. That does not negate the need for other reporting mechanisms to be put in place. As I outlined earlier, the estimates and votes process is long established in this House and provides a means of financial accountability.
	Let me turn to Lords amendments 75 to 80, which provide statutory cover for expenditure incurred in connection with schemes run by Departments other than the Treasury. They do that by providing statutory cover for schemes where the financial assistance being provided will both facilitate the activities of the bank or financial institution and provide a benefit to a third party, such as customers of banks or other financial institutions, or to the wider economy. Expenditure incurred in connection with schemes such as the home owners mortgage support scheme announced by the Prime Minister on 3 December and the working capital scheme that I announced to the House on 14 January in my capacity as Under-Secretary of State for Business, Enterprise and Regulatory Reform are covered by the provisions.
	Lords amendment 81 addresses a different issue regarding the provision of financial assistance. As the House will know, the Treasury has made a number of arrangements to support the UK banking sector. They include the credit guarantee scheme for new inter-bank lending introduced in October 2008, as well as the asset protection scheme and guarantee scheme for asset-backed security that were announced on Monday 19 January. Those schemes involve the provision of guarantees or similar financial commitments by the Treasury. Although we hope that there will be no need to make any payments, the Treasury must be in a position to settle promptly any liabilities that arise. Normally, that would be effected by securing parliamentary approval for an estimate, but clearly a need for expenditure might arise at any time, including during a recess when estimates could not be obtained. The amendment addresses that by providing for direct access to the consolidated fund without an estimate in cases where the funds are required urgently. It also provides for parliamentary reporting with suitable safeguards in respect of commercial confidentiality and the maintenance of market confidence.

Peter Bone: Does that not undo what the Minister said earlier in the debate? He said that there would always be an estimate so that the House could decide whether or not to approve the expenditure of money, but it appears that money can be spent without any approval during a recess. I assume that we will not be able to come back afterwards and unspend it, so did not what we voted on earlier in fact commit us to spending it?

Ian Pearson: No, the money resolution that we voted on earlier will not do what the hon. Gentleman suggests. Where funds are needed urgently and it is not possible to have estimates, that money can be provided. However, it will still be subject to the same accountability systems when Parliament returns after a recess.

John Redwood: Will the guarantee scheme apply only to British banks lending to British people and companies, or will it apply also to foreign loans and banks?

Ian Pearson: The working capital scheme that is being progressed at the moment relates only to UK banks. We are discussing the scheme with the major UK banks, but we are not in conversation with foreign banks about it.

Jim Cousins: May I follow that up? My hon. Friend has made it clear that the facility will be available only to UK banks, but an important point that should not be overlooked is that much of the exposure that will be supported could be outside the UK. In fact, I can think of one or two big financial institutions that will carry most of their exposure outside the UK. Is that also covered by the loan facility?

Ian Pearson: We are trying, through the working capital scheme, to progress our discussions with UK banks about their credit lines to UK companies. The policy intention is not that the Government should underwrite the loans of non-UK companies or investments made by UK companies in assets outside the UK. We need to be clear that the purpose of the working capital scheme is to help UK companies that need access to credit. Some have had their credit lines withdrawn, and the Government want to give a reassurance that credit will be there in the future. I can assure the right hon. Gentleman that the policy is UK focused and that the intention is not to fund projects internationally in the way that he describes.
	Finally, I turn to amendment 82 to clause 229. Clause 229 provides for loans to be made urgently from the national loans fund where that is necessary to protect financial stability. Of course, loans can be made with money voted by Parliament but, again, an estimate will have to be obtained first. However, loans can be provided from the national loans fund without an estimate, provided that the relevant requirements are met. That means that they can be used in urgent cases for which no estimate is available.
	After further reflection, the Government felt that the same kind of reporting arrangements that apply to the urgent payments under clause 228(5) should also apply to individual urgent loans under clause 229. As I have just explained, Lords amendment 82 does that with the same kind of anonymity and public interest conditions as those used in subsections (6) and (7) of clause 228.
	These Lords amendments are detailed. For what we believe are good reasons, the Government disagree with one of them, although we accept its general principle and thrust. We think that the balance between transparency and confidentiality that their lordships proposed needs to be changed slightly, and I have explained our thinking. I hope that the House will agree to our amendment in due course.

Mark Hoban: I will deal with the amendments in a different order from the Minister and start off with Lords amendment 79, which is important. It triggered much of the debate that we had on the money resolution, in the sense that it would broaden the way in which the Government can use public money to support the banking sector or other financial institutions. When we debated clause 225 in Committee, it was more narrowly focused, but the amendment would widen its scope. I want to test with the Minister my understanding of how broad the amendment is in practice.
	My understanding is that the Bank of England's asset purchase facility would fall within the ambit of the clause, because the scheme permits the Bank to purchase commercial paper, and that indirectly benefits banks by reducing the potential demand for funding, so any financial commitment that arises from the asset purchase scheme would be covered by Lords amendment 79. The Minister mentioned Lords amendment 81; I am trying to understand where the Government have broadened the nature of the assistance that can be given. I am thinking of how new subsection (1A)(a) and (b)—particularly (b)—which is inserted into clause 225 by Lords amendment 79, will relate to a range of schemes. I assume that the funding package for the motor industry that the Minister announced in the House last month would come within the ambit of new subsection (1A)(b).
	I wonder if I might push the Minister a bit further to see how elastic the provision is. Last week, at the CBI's manufacturing dinner, Lord Mandelson floated the idea of a scrappage allowance. The intention was that it would restart car purchases in the UK by encouraging people to trade in an old car for a new car. A number of people in the industry proposed the idea. I would have thought that it was within the realms of the Government's creativity to claim that any expenditure on such a scheme would be covered by the subsection, because new subsection (1A)(b)(iii) refers to
	"its effect on a particular industry or sector of the economy".
	Clearly, a scrappage allowance would stimulate the demand for consumer credit, kick-start the motoring sector and potentially reduce the demand for working capital finance from the banks. That may seem a far-fetched example of a scheme that could fall within the scope of the amendment, but it is not clear how Lords amendment 79 would be applied, or what schemes would fall within its remit. I would be grateful if the Minister clarified that.
	When the clause was originally discussed in Committee, it referred just to banks. An amendment was made in Committee to extend coverage to other financial institutions, so arguably under the clause financial support could be provided to insurers, fund managers and independent financial advisers—a whole gamut of financial institutions. It would be down to the Government to determine which financial institutions could benefit.
	I again ask the Minister about the scope of the provision. If the Government decided to fund free contents insurance for tenants in the social rented sector, it would clearly help the insurance sector. Would that be covered by Lords amendment 79? It would be helpful for the Minister to give us an idea of the areas that he believes fall within the scope of the amendment before the House decides to accept it. Clearly, as was demonstrated earlier, there is widespread concern across the House about the potential level of financial assistance and the commitments to be undertaken by taxpayers that could flow from the amendments.
	Lords Amendments 81 and 82 deal with the process of granting financial assistance through the Consolidated Fund or the national loans fund. As the Minister said, an increase in transparency emerges from the two amendments, which state that a report should be laid before Parliament specifying the amount paid or loaned under the schemes, but will he be more specific about how he anticipates the House approving amounts lent under the scheme? In his exchanges earlier with my hon. Friend the Member for Wellingborough (Mr. Bone), he referred to the normal process for approving estimates. Will the Minister set out more clearly how he anticipates the House approving commitments made under the financial assistance provisions of the Bill?

John Redwood: Does my hon. Friend share my reading of the amendments? Under Lords amendment 82, if the Treasury decided that it did not want to report to the House or anyone else, it need never tell us anything about the amount paid. The amendments state that it may dispense with the requirement, which is extremely worrying.

Mark Hoban: My right hon. Friend makes an important point. My interpretation is that although at the time the Government might decide for reasons of confidentiality not to lay a report before Parliament, that would be swept up in what was Lords amendment 83, which we pressed in the Lords. I hope that would be covered in the new amendment tabled by the Government in lieu, so there would be a report. It may not be as timely as we would like, but there would be reporting at six-monthly intervals.
	The Minister made an important point about the balance to be struck between confidentiality and public scrutiny. Clearly, the transparency of information provided was a barrier to giving covert assistance to Northern Rock. We need to have that debate in mind, but I hope that the six-monthly reporting will act as a sweeper, so to speak, to pick up all those instances where financial assistance has been given but no report has been laid before Parliament.
	When the Government decided, in the first phase of the bank bail-out, to take stakes in RBS, what was then Lloyds TSB and HBOS, we had a debate on the Floor of the House in which the Financial Secretary to the Treasury and my hon. Friends the Members for South-West Hertfordshire (Mr. Gauke) and for Wellingborough participated. Specific approval was given for an estimate to pay for that investment. Will we have the same opportunity to vote on the elements set out in the second bail-out package? It was not clear from the Minister's remarks whether we would have a specific vote on those elements, or whether they would go through the normal estimates procedure, where individual items are not voted on.
	Not only have we seen the second phase of the bank bail-out, but money has been lent to the financial services compensation scheme in respect of the rescue of the Icelandic banks in the UK, and we should ensure proper scrutiny of that in the House. I would welcome greater clarity from this Minister as to how items would be voted on and whether there would be stand-alone debates on the various aspects of financial assistance envisaged in Lords amendment 79.
	The Minister also drew the House's attention to the words "too urgent" in Lords amendment 81, which relate to when there was a pressing need to provide money from the Consolidated Fund, the issue being whether money could be granted before there was a vote on it. He gave the specific example of there being a crisis during a recess and Ministers having to act urgently without the approval of the House. Will he confirm that when the House is sitting, the Government's first preference will be to go through the estimates procedure, rather than rely on the powers set out in Lords amendment 81?
	Lords amendment 83 was tabled by my noble Friend Baroness Noakes and Lord Turnbull in the other place. One of the important themes in the debate is transparency and understanding the scale of the taxpayers' liability. We touched on that in different contexts during our debates on the Bill in this place. I felt at times that there was a bias towards secrecy as a way of enhancing financial stability, so I welcome the increased level of scrutiny that comes from the amendments made in the other place. It is important that the tripartite authorities are accountable to Parliament and others for the use of their powers under the Bill. The report envisaged in Lords amendment 83 went a long way towards increasing that transparency. It set out the requirement for a quarterly report to be made to Parliament on sums actually and potentially committed under the financial assistance powers in clauses 228 and 229.
	During our earlier debate on the money resolution, I set out a number of the schemes that the Government have announced in the past three or four months, and I have no intention of repeating them. Clearly, however, there is a range of schemes that involve significant financial commitments. I have talked about the asset protection scheme; one estimate this weekend suggested an amount of up to £400 billion. The Minister referred to the working capital scheme, and there is the scheme proposed by Sir James Crosby in relation to asset-backed securities. There is also the asset purchase facility, under which the Bank of England has been authorised to acquire commercial paper. So there is a range of schemes with significant price tags. It is important that taxpayers should understand the extent to which they are exposed to the financial assistance given under the schemes, and that Parliament and the taxpayer should hold the Government to account for the money involved in them.
	One of the points made in the other place was that the schemes are put forward by a range of Departments: the Treasury is responsible for some, the Department for Business, Enterprise and Regulatory Reform for others and the Department for Communities and Local Government for the homeowners' scheme. It is important that the Treasury acts as the focal point for drawing the schemes together and ensuring that a proper report is made to Parliament.
	When Lords amendment 83 was debated in the Lords, there was significant support from the Liberal Democrats, the Conservatives and a number of Cross Benchers. The majority of 35 in the vote on it demonstrated the strength of feeling about the welcome move to increase transparency. During the debate, Lord Davies of Oldham, speaking for the Government, opposed the amendment as he felt that it was unnecessary and that there were sufficient existing powers within the legislative programme to ensure that there was proper scrutiny. He prayed in aid the Exchequer and Audit Departments Act 1866 and the various Consolidation Acts and Appropriation Acts. Frankly, his arguments did not wash with the House of Lords; it did not feel that they would ensure sufficient transparency. Lords amendment 83 was backed so that there could be proper reporting of the amounts involved.
	In their amendment, my noble Friend Baroness Noakes and Lord Turnbull reflected some of the concerns that the Minister mentioned. They referred to summarising data so that individual obligations were not necessarily seen and pointed out that there may be situations where information could be withheld as a matter of public interest.
	What I take from the Minister's remarks is that the Government have listened to the well-argued points that were made in the other place. Lord Davies said that the current mechanisms of accountability are sufficient. Conservative Members would like the Government's conversion to the recognition that given the sums involved there must be greater transparency and accountability in the financial assistance that is given. We welcome the Treasury's willingness to be as open as possible in disclosing information on exposure, subject to the caveat in new subsection (4) in the Government's amendment. That represents a significant move by the Treasury and a recognition of the strength of the arguments made in the other place, and it is an important advance for transparency in how these matters are dealt with. Taxpayers have a right to know how much a bank bail-out is costing them. We therefore welcome the fact that the Government have tabled their amendment in lieu and we will not divide the House on it.

Colin Breed: I, too, am happy to support the amendments. The balance between transparency and accountability is very difficult to achieve in these areas. Trying to ensure that we get as much information as we can without undermining the whole purpose of what we are trying to do is a delicate balance. The original amendment was a useful contribution, and I welcome the Government's slight amendment to it while nevertheless agreeing the principle.
	I welcome the inclusion of other financial institutions. I have always felt that a significant number of financial institutions are doing a good job in that they do not receive deposits but take wholesale money, they have lent responsibly, and they have been a genuine provider of consumer credit to an important market that we would not want to be diminished in any way.
	However, there is a problem with confidentiality. We seem to have got ourselves into a situation where the leaking of information is becoming more prevalent. Given the ingenuity of financial journalists, in particular, in phoning around various institutions and individuals, I suspect that, whatever we do to try to ensure otherwise, it will not be too long before these bits of information will regrettably be coming out in the press, possibly undermining our actions.

Peter Bone: The hon. Gentleman makes a good point. Is not one of the problems that if such leaking, which may be inaccurate, occurs, the lack of transparency will give more weight to the leaks that are inaccurate?

Colin Breed: That is absolutely right. It is a bit of a conundrum, and it will be difficult. I am assuming that institutions that receive Government support will have to make the appropriate note in their audited accounts, so if they take it late on in their financial year it may not be long before they have to report it anyway.

John Redwood: It is even more immediate than that. If material sums of capital or loan stock are injected into a bank, it has a duty to tell the markets to avoid a false market in its shares, so I cannot really see what all this is about.

Colin Breed: When I mentioned the banks' audited accounts, it occurred to me that they might have to make a market announcement if they took large amounts, so I suspect that the information will come into the public realm anyway. I hope that the public, through an educational process, will be able to assimilate this knowledge in a much more balanced way, following what they were subjected to at the front end of Northern Rock, and will begin to understand how organisations are availing themselves of facilities.
	Overall, the amendments are worthy of support, but they may not quite achieve all that the Minister expects them to.

John Redwood: It is typical of the whole debate about banks that we are in this miasma of nonsense. I do not know whether Ministers and those who drafted the legislation have ever operated under company law, or know any company law, but the simple truth is that if the Government are to inject equity capital into a bank, they not only need to make a prompt announcement to the stock market, but they need to table the details and get the approval of its shareholders before the transaction can be completed. If a large amount of longer-term loan capital or other priority capital is to be injected into a bank, that bank would be duty bound under company law to make an announcement as soon as it had an agreed deal with the Government.
	If we are trying to shield nationalised banks, the purpose of the amendments is wholly damaging. Where we have nationalised banks, we know that the Government stand behind them. Presumably, the point of nationalising them was to transfer all the credit risk and difficult risks in the bank to the Government's account so that the bank's credit is as good as the Government's. Once we are in that position—short of the Government themselves getting into an uncreditworthy position, which we pray they will not—it is the duty of the Government to come to the House immediately when they wish to inject subsidy, loan capital, share capital or whatever it may be into a bank in public ownership. There can be no harm in telling us that immediately because the bank is nationalised and the public can take reassurance from the fact that the bank effectively has a claim on the Consolidated Fund of the United Kingdom, or on good will and votes in Parliament on the initiative of Ministers.
	I find both the original amendment, well-intentioned though it was, and the Government's amendment in lieu, far too weak and feeble with respect to nationalised banks, where we have a right to know soon or immediately what they are putting in and why. When it comes to private sector banks, where we are dealing with longer-term share capital and loan capital, we find out details promptly, and so we should, because there are good rules to ensure that there are not dishonest or false markets. Those are relevant considerations for the trading position of the banks.
	Why has this situation arisen? Because the authorities got into difficulty when it was rumoured that they were trying to find a shotgun marriage for Northern Rock after it first hit difficulties. We were then told that they were not able to do that under time pressure because a combination of British rules and European legislation meant that they would have to disclose details before they had done a deal, which was very embarrassing for them. If that is the case, they ought to fix those rules and that legislation, because the bank or the other authorities need the power, in extremis, to act as an honest broker to a deal if one of the commercial banks or other financial institutions is in such trouble and there are buyers out there. That always used to happen without any problem. The problem seems to be based on a British lawyer's interpretation of a European law—an interpretation that does not seem to be shared by other Community lawyers or other Community Governments, where they have been able to do such deals without the same difficulties. I hope that we can address the underlying issue because these proposals do not address it.
	The other possibility is that the proposals are designed to deal with short-term assistance, given in the normal way, with a central bank acting when there are extraordinary stresses and strains on the market as a whole or on individual banks. The Economic Secretary is nodding his head, showing that that is what the proposals relate to. If he reads the clause in question, he will find that it relates to all the things that I have already spoken about, which is why I think it is clumsily drafted.
	Let us examine how much secrecy there needs to be for short-term assistance for an individual bank, and how that relates to the rules of company law. These are all difficult cases, but there could be a situation—there certainly was in August and September 2007, which the authorities did not respond to in a timely way—where an institution such as Northern Rock is in immediate need of cash to replace borrowings that it can no longer access from the private market. In such a case, we would hope for the central bank to be responsive, and that it would make loans against good security. If they are made as short-term loans against security within the normal borrowing powers of the bank and within what it has already reported to its shareholders, that could be done in secret, and it is best done in secret. It always used to be done in secret, and if there was any danger of the market finding out that a bank needed such assistance, the Bank of England used to say to several banks, "We want you all to take a bit of money from us this week, so that we can let the market know that quite a few banks need us, because the market is a bit stressed." The finger of doubt would therefore not be pointed at one particular institution. Other techniques could also be used. My concern about the amendments is that they imply that we are talking about longer-term finance that should be properly reported and completely transparent.
	One would hope that under the six-month provision suggested in the Government's amendment, any temporary assistance would be lent and repaid in that period. The idea of temporary assistance is that it should meet a short-term shortage in the market, or that a bank could replace it in other ways, in the normal course of business and reasonably promptly. The reporting requirements would not then need to apply. My concern is that the Government's amendment sets out an effective override so that we would never know which individual bank or arrangement was involved. We have a right to know about many arrangements, particularly in relation to nationalised banks.
	The hon. Member for South-East Cornwall (Mr. Breed) made the extremely good point that if we look back on the sorry story of the past few months, we see that the various attempts to prop up or support banks have been conducted through the media. One of the most unpleasant things about the injection of shotgun money into the banks—£37 billion of share capital over that fateful weekend—was that we had a running commentary on it. We should not have been told about it. The banks should have gone into the Treasury by the back door or done things by a video conference link. We should not have been told that there were crisis talks, that the banks were in trouble and that there had to be a deal by the opening of business on Monday. All that added to the crisis atmosphere.
	We have never known who was responsible for that. I do not blame the journalist who got wonderful stories out of it and provided us all with a running commentary, as any journalist who got such information would obviously see it as public information and want to use it. However, that was not the way to mount a rescue if the banks in question really needed it. Personally, I do not believe that they were in desperate need of such a rescue at that point, and there would have many easier and cheaper ways of helping them. Of course, I would not have wanted any of them to go under, but the high drama was not required, and there certainly did not need to be such public exposure over that weekend.
	If it was necessary for public capital to be injected into those banks—I remain to be persuaded—it should have been done after proper reflection, evaluation and valuation. Of course it had to be made public, but only when the participants knew the details and had something reassuring and confidence-building to present to the market. The commentary during the run-up to the deal undermined confidence by suggesting that the banks were in crisis, and indeed by naming one bank that turned out not to need any public money, which was not terribly helpful to that bank.
	I therefore do not believe that the Lords amendment goes far enough, and I do not believe that the Government's proposed revision goes nearly far enough. It is a cover-up amendment rather than a transparency amendment. Fortunately, we will get more transparency in the private sector through other rules, regulations and laws, but I am concerned about the complete absence of transparency that will yet again exist in the public sector. I hope that the Economic Secretary will think again, and that he agrees that every penny going into a state-owned bank should be reported to Parliament promptly, with its full terms, so that we know what is going on.

Stewart Hosie: I wish to speak mainly to Lords amendment 83 and the Government's alternative to it.
	I was struck by the Economic Secretary's saying that the Government had acted quickly during the banking crisis. This is 10 February 2009, and I believe that it was 30 January 2008 when the consultation on financial stability and depositor protection was published—five months after the run on Northern Rock began. This is effectively a carry-over Bill. We have secured Northern Rock after an interminable delay and recapitalised the banks, and there has been a facilitated takeover of Bradford & Bingley, with the taxpayer now holding the liability on its mortgage book. Whatever else the Government or the Economic Secretary have done, it has not been decisive or quick. However, now that we are reaching the endgame in the Bill, which we are committed to supporting, transparency is important, not least because of the giant sums involved.
	The Economic Secretary knows that transparency has caused concern since the publication of the consultation last January, and at various stages of the Bill's passage. I am therefore especially struck by proposed new subsection (2) in the new clause that the Lords amendment proposes. It states:
	"The Treasury shall ensure that the report contains sufficient detail to enable Parliament to understand the actual and potential commitment of public money to financial assistance".
	That is sensible given the hundreds of billions—possibly a trillion or more—of pounds that are actually and, more important, potentially committed. Taxpayers have a right to know what they are in for and what the loss and liability may be.
	Transparency is also important because of what the Economic Secretary said: the Bill uses public money. Again, transparency is important because clause 235 removes the need for the Bank of England weekly return—people have commented on that for some time—and clause 236 allows the Bank of England to determine what it reports, when and to whom.
	I make no apology for repeating points that have already been made. Transparency is important because support now extends beyond the banks, financial institutions and deposit-taking institutions. Already, around £200 billion has been put in the special liquidity scheme. We have had the £37 billion recapitalisation of the banks, some of which was lost through the removal of the preference share into ordinary capital. We have the £250 billion guarantee scheme for new inter-bank lending—I am not sure what the draw on that was or is.
	There are also: the £10 billion working capital scheme; the enterprise finance guarantee scheme of potentially £1.3 billion; the £75 million capital for enterprise fund; the unlimited Government insurance for banks for expected excess bad debt, which is an extraordinary liability; and the £50 billion for the Bank of England to buy assets in all sectors. If I have understood the press reports, that process might continue, if the £50 billion runs out, through quantitative easing, which means the bank printing money to buy assets. That has not been denied and it worries me greatly.
	There is also the £50 billion of bank credit guarantees, the £1 billion of direct loans to the car industry, and the additional £1.3 billion of EU funding, which is to be unlocked. There is therefore a massive need for transparency. We are considering scary, big numbers, which have the potential to do huge damage to the public finances in the medium and long term if things begin to go badly wrong.

Michael Fallon: In the normal course of events, we would not see the Treasury balance sheet until the Treasury accounts were published, probably at the end of each July. Given the scale of the schemes, which the hon. Gentleman has described so well, should not we have a monthly or quarterly update from the Treasury about the exact state of the balance sheet?

Stewart Hosie: Yes, that would be helpful. However, I am conscious of the need to protect individuals or organisations that may receive assistance. There is a balance to be struck. I am worried that the Government's alternative to the Lords amendment does not do what the Lords amendment provides for: allowing Parliament to understand the actual and potential commitment. I am less vexed about whether the report is made weekly, monthly, quarterly or six-monthly, as long as we can begin to understand the genuine extent of actual and potential liability.

John Redwood: The hon. Gentleman is doing the Minister's job for us, by spelling out the almost £700 billion of commitments that we would like to be reported properly. In addition, the hon. Gentleman might like to know that the Bank of England balance sheet was around £40 billion at the time of the run on Northern Rock. It hit £240 billion at the end of last year, which is a sixfold increase. However, the Bank of England increases, together with those other schemes, amount to about £1 trillion. That is why we want to know where the money is going.

Stewart Hosie: That is absolutely right. I am sure that right hon. and hon. Members will know of other liabilities, real or contingent, that they could add, but I will not into that today.
	The Government's alternative to Lords amendment 83 says:
	"The Treasury must aim to give as much information as possible in a report, subject to"
	not specifying individuals or amounts to individuals, and I understand why. My question for the Minister is this: will he put it on record that the intention behind the words with which the Government intend to replace Lords amendment 83 is still to provide sufficient detail to enable Parliament and the public to understand the actual and potential commitments in the public finances?

Peter Bone: At the beginning of the debate the Minister seemed to say something about working capital that rather surprised me. He said that working capital would be provided only for British banks and that it would not be allowed to cover foreign loans. Some might suggest that that would mean British credit for British business, but surely it would be illegal under EU law. The Minister needs to clarify that—I am sure that he did not mean it, but that is what he seemed to imply.
	It was interesting that the money resolution went through on a very small vote. The Government could only muster fewer than 300 Members to vote for it, which is way less than half the Members of this House, so clearly there is considerable concern about that open-ended cheque. The Minister could not tell us how much money is involved, because he does not know how much money is involved. However, we are talking about a simply extraordinary amount—billions and billions of pounds.
	I want to talk about Lords amendment 81 to clause 225, which deals with transparency—or, should I say, the lack of it. We have already heard from the Minister that if there was a major financial crisis in August when Parliament was not sitting, the Treasury could spend billions and billions of pounds off its own bat, and when we came back in October, we might get a report about that. However, proposed new subsection (5) to clause 225 says:
	"Where money is paid in reliance on subsection (4)"—
	perhaps by the Treasury in the recess—
	"the Treasury shall as soon as is reasonably practicable lay a report before Parliament specifying the amount paid...but not the identity of the institution".
	We would get a report, although it is interesting that we would not know which institutions had received the money. Proposed subsection (6) to clause 225 says:
	"If the Treasury"—
	and the Treasury alone—
	"think it necessary on public interest grounds, they may delay...a report".
	That is bad enough, but the words after "delay" are:
	"or dispense with a report"
	altogether. Therefore, a massive amount of money could be spent in the recess that would never be reported to this House, because somebody in the Treasury claimed that Parliament should not be told on public interest grounds.
	That is what this Government are all about. They do not like debate, they do not like transparency and they want to do everything behind closed doors. This Government's fundamental mistake is not believing in their own arguments and not coming to Parliament to debate them fully. Despite what the Minister claims, we have not had any debate in Government time on the economic situation. We have had a few statements, where a Minister or the Chancellor gets up and spends—

Madam Deputy Speaker: Order. I do hope that the hon. Gentleman will confine his remarks to the amendment that he said he wished to discuss.

Peter Bone: Thank you, Madam Deputy Speaker. I am sorry if I strayed from new subsections (4), (5) and (6) to clause 225, as proposed by Lords amendment 81, but the implication seems to be that they would stop debate on the Floor of the House. I was trying to make the point that the Government's mistake is not to have that debate and not to believe in their own—

Madam Deputy Speaker: Order. I think that the hon. Gentleman has already made that point.

Peter Bone: Thank you, Madam Deputy Speaker.
	In conclusion, then, I would say that we are in a difficult position with all these Lords amendments and revisions by the Government, but we are committed to getting the Bill through Parliament as soon as possible. However, we are dealing with an Alice in Wonderland situation, in which the Government can spend vast amounts of money without any reference to Parliament.

Brooks Newmark: I am surprised that the Government are opposing the Lords amendment that would require a quarterly report on financial assistance. Our proposal in the Lords amendment is very much in accord with democratic values and the kind of practice that many of us see in the private sector when we report to our shareholders. The Government talk about normal mechanisms, but these are not normal times. As the Children's Minister himself has said, this is the most serious recession in 100 years. Even the Prime Minister thinks that we are already in a depression, but perhaps that is just his own state of mind.
	Taxpayers have a right to know what liabilities the Government—and, in turn, taxpayers—have. Those liabilities should be made clear to the public, whether we call them on-balance sheet liabilities, off-balance sheet liabilities or contingent liabilities. Unfortunately, however, this is part of the Government's pattern of hiding the real state of their finances. According to recent figures from the Office for National Statistics, net debt is about £697 billion, or 47 per cent. of gross domestic product. To put that in normal terms, it represents £25,000 per household. The reality, however, is that the Government are hiding about another £1.2 trillion off-balance sheet, primarily in public sector pension liabilities. So taxpayers actually owe more than £75,000 per household—

Madam Deputy Speaker: Order. The hon. Gentleman has had a degree of latitude, but he is now going wide of the amendments under discussion.

Brooks Newmark: I appreciate your guidance, Madam Deputy Speaker. I was trying to point out the importance of the need for greater transparency by highlighting a pattern of a lack of transparency. However, I will return directly to the subject of the debate. As the hon. Member for Dundee, East (Stewart Hosie) and others have said, taxpayers have a right to know what their exposure is. That is the point that I was trying to make. If we are to maintain the trust of taxpayers, we must be as open and transparent with them as we can. Quarterly reporting on what we are doing with their money does not seem to represent an undue burden in these extraordinary times.

Jim Cousins: I had not intended to speak in this debate, but the correct description by the right hon. Member for Wokingham (Mr. Redwood) of the United Kingdom as a large pool of bank debt loosely tied to a medium-sized country was a telling one. He went on to refer to the possibility that our Government, and others in the western world, might be testing to the limit the ability of Governments to raise their own debt. That was also a fair point, which we need to address when we consider these issues.
	The other place has done us a service in providing us with these amendments. I understand the Government's difficulty in working out how to report to Parliament on an ever-changing and fast-moving situation. Their efforts to do so are set out in their alternative to Lords amendment 83, and I have no quarrel with them, but they must accept that the House cannot wait until the end of the first six-month period set out in their amendment for a comprehensive report on where we have got to. That point was fairly made by the hon. Member for Dundee, East (Stewart Hosie).
	We should not have to wait until October to discover where the state aid reference to Northern Rock—which has paralysed Northern Rock's ability to serve the Government's purpose of opening up new lending—has got to. We should not have to wait until October to work out the extraordinary situation that is now developing with the remnant of Bradford & Bingley—which is still in state ownership—in which the Government will find themselves owning a significant proportion of the outstanding buy-to-let mortgages in this country. That proportion could be in the order of 20 per cent.
	Through their ownership of Bradford & Bingley, the Government are still observing the terms of the deal that Bradford & Bingley made with GMAC, the American General Motors company that branched out into finance. Many of us have had to deal at constituency level with GMAC-provided mortgages, which are in a sorry state. Bradford & Bingley did a deal in which it undertook to acquire billions of pounds' worth of those mortgages on a quarterly basis. The last quarter in which those mortgages will be acquired ends on 31 March 2009, by which time 20 to 25 per cent. of the stock of self-certified mortgages for the self-employed will, through the GMAC acquisition, be in state ownership. The House needs to know where we have got to with all this. We need to know what the immense policy consequences of those deals will be, and what they will mean for public expenditure.
	In this debate, we have clarified that the Government intend to support UK banks and not other banks. I think that we have also established that the support that the taxpayer is making possible through the working capital fund will go only to UK companies. However, through the guarantee of assets—part of which has already been undertaken, and more of which will be decided at the end of this month with Lloyds and RBS—it is clear that the British taxpayer will be supporting loan books that are not UK-located.

John Redwood: The hon. Gentleman is making a powerful point about the need for transparency. Is he aware that only one pound in seven on the balance sheet of RBS is a loan to a British person or company?

Jim Cousins: I did have some idea about that, but I am grateful to the right hon. Gentleman for pointing it out, because it brings me to my next point. Through British taxpayers' support for the RBS balance sheet, we are supporting a very large stock of United States car loans. The British taxpayer is standing behind those loans. Does the House not find it peculiarly ironic that the Government are wrestling with schemes to underpin the UK car industry when we are already guaranteeing car loans in the United States, through RBS's exposure? I do not blame the Government for that situation. It follows inescapably from the support that RBS has been given. However, it does mean that the Government have to report to Parliament on all this at a very early date. These matters cannot be left until October.

Ian Pearson: I shall focus on three main areas in response to hon. Members' comments on the Lords amendments. The first is the widening of the extension of statutory cover for expenditure incurred by the Treasury or other Government Departments; the second is the parliamentary accountability mechanisms ordinarily in place; and the third is the Government motion to disagree with Lords amendment 83, which has been much debated.
	In passing, however, I would first like to deal with the accusation that the Government delayed taking action to support Northern Rock. I completely refute that: the Government took timely action— [Interruption]—and let me point out that the official Opposition would have let Northern Rock fail, which would have created a crisis for savers in this country. We were entirely right in what we did.
	The role of the media, which the right hon. Member for Wokingham (Mr. Redwood) and the hon. Member for South-East Cornwall (Mr. Breed) mentioned, is another important issue to deal with in passing. It is true to say that we live in a 24-hour news culture in the UK. In that environment, it is not possible to have the sort of cosy relationship that might have existed in the past between the Bank of England and other banks or to justify the expectation that cosy deals can be done and kept secret. Extensive scrutiny takes place through the media. On the whole it is helpful, but the right hon. Member for Wokingham was right to point out that, on some occasions, media speculation has resulted in damaging activity—damaging to markets and damaging to companies' reputations.

John Redwood: Does the Minister accept that many big mergers and fundings in the private sector, which involve large numbers of people, are done with complete confidentiality? It is then preserved until a formal announcement is made because people know that they could face a criminal charge if they do not respect it.

Ian Pearson: I agree with the right hon. Gentleman's point. I would like to see those proprieties respected much more frequently, but it does not seem to happen that way.

Peter Bone: The Minister is being his usual generous self in giving way. The point he seems to be making is that because the Government were worried about misinformed speculation getting to the markets, they decided they would use one particular BBC media person to present the Government's case. Is that the reason all the stories came from the same BBC man nightly on our news screens?

Ian Pearson: That was not the point I was making at all. I was responding to comments from right hon. and hon. Members about the role of the media, and I was pointing out that that role could be both good and bad. It can be good in respect of the level of scrutiny brought to proceedings, but it can sometimes be bad and damaging if unwarranted speculation creates problems in the economy.
	Let me move on to the three main areas that I outlined earlier. First, I shall deal with the extension of statutory cover to expenditure on schemes—principally the Department for Communities and Local Government scheme to support home owners' mortgages and the Department for Business, Enterprise and Regulatory Reform's working capital scheme. Members are right to point out that amendments 75 to 80 cover the authority to spend in those areas.
	We think it right not only that we recapitalise the banks, but that other action be taken to help to support the economy in these difficult times. That is why it is important to support home owners who are facing difficulty paying their mortgages and why it is fundamentally right to ensure that UK companies maintain good levels of working capital. What we are trying to achieve through the working capital scheme is to agree a portfolio of companies with each of the major banks that are UK-based and for which we will provide a 50 per cent. guarantee of credit, which will stimulate the further credit lending that the UK economy needs at this time.
	The hon. Member for Fareham (Mr. Hoban) asked a specific question about amendment 79, particularly about widening the scope. Let us be clear: the amendment allows Departments other than the Treasury to run schemes that can benefit banks' customers, but there must be some connection with banks or financial institutions. It is thus wider, but it cannot support schemes that are purely for non-financial institutions; in that respect, it is limited, but it allows home owners' mortgage support and the working capital scheme. That is the intention behind the provisions.

Mark Hoban: On that point, I specifically referred to the scrappage allowance that was floated by Lord Mandelson last week. Would that scrappage allowance fall outside the scope of amendment 79?

Ian Pearson: As I have indicated, there has to be connection with banks or financial institutions, so whether a scrappage scheme falls under amendment 79 would depend on how it was designed. Such a scheme might fall within the powers granted to DBERR under current industry legislation.
	Let me move on to amendment 81, about which the hon. Member for Fareham also asked some questions. The purpose—and the effect—of the amendment is to ensure that the financial assistance clause provides statutory cover for drawing money directly from the Consolidated Fund without waiting for estimates to be approved in cases where payments need to be made urgently in order to honour guarantees, indemnities or other commitments given as part of providing financial assistance to financial institutions. We debated that specific issue earlier.
	The hon. Gentleman asked about the Government's preference. He recognised the occasional need for Governments to act urgently, and I think the best answer I can give him is that clearly we cannot rely on financial crises happening only at the most convenient point in the estimates timetable or only when Parliament is sitting. That is one reason why clause 81(4) is necessary, but we will not use it unless we have to.
	That brings me on to the second area—the general process of financial accountability and reporting to Parliament. First, I want to say that we have some of the best processes for financial reporting, accounting and transparency of any equivalent Parliament in the world. I do not start from the position that what we have now is defective—far from it. I think our system of having money resolutions that provide cover for expenditure, and of having estimates and votes—indeed, the whole supplementary estimates process—is a robust one. Our process of accountability through Select Committees and the reports regularly presented by them to Parliament is similarly an example of where the UK Government leads many others.
	I recognise that the exceptional actions taken by the Government in recent months require some additional response, and—given circumstances that are also exceptional—I think it right for Members to issue a challenge by asking what measures Parliament needs to introduce in addition to the normal accountability and reporting arrangements that it has established. That, essentially, is the debate that took place in the House of Lords. It revolved around a recognition that, in view of the strong public interest and the amounts of money involved, greater accountability and transparency were needed in addition to our existing mechanisms. I think it was also recognised that a balance must be struck between the need for that accountability and transparency, and the need to ensure commercial confidentiality and not to damage institutions.
	Our amendment in lieu of Lords amendment 83 is intended to explain the Government's reason for striking the balance that did. I explained that in my introductory remarks, but let me now say briefly that we consider a period of six rather than three months more likely to ensure that financial institutions are not identified, given that such identification could cause damaging problems. However, there is no lack of willingness on our part to be accountable for our actions and decisions, and to report them in a timely fashion.
	This House would rightly be the first to criticise the Government if they attempted to introduce legislation without sufficient consideration and consultation. We have devoted a significant amount of time to the production of the Bill, we have listened throughout to the comments that have been made, and we have introduced many improvements. I should like to think that the amendments made in the Lords have strengthened the Bill further, which is why we support all of them except Lords amendment 83, on which we beg to differ with the Lords while wishing to retain the spirit of what they had to say.

Brooks Newmark: I acknowledge the sensitivity with which the Minister is trying to approach the issue, and I agree that in normal times semi-annual reporting would probably make sense, but these are extraordinary times. I almost agree with my hon. Friend the Member for Sevenoaks (Mr. Fallon) that there should be monthly reporting, but given the fast-moving times and the vast amount of taxpayers' money put at risk, I feel that quarterly reporting represents a fair compromise. Surely it makes sense. Six months is a huge amount of time, given the dynamics of the financial markets today.

Ian Pearson: I think the hon. Gentleman was in the Chamber to hear my opening remarks, when I outlined the Government's reasons for reaching their view on the six-month period. I have not changed my mind during the course of this short debate—I still think that six months is appropriate—but we have taken on board the spirit of the Lords amendment. We have always sought to adopt a general spirit of bipartisanship and compromise—

Stewart Hosie: rose—

Ian Pearson: —which I am sure the hon. Member for Dundee, East is not intending to rail against.

Stewart Hosie: The hon. Member for Dundee, East is going to repeat the question that he has already asked. The Minister has said three times that the Government wanted to retain the spirit of the Lords amendment. I repeat my last question to him: does that mean that the Government's intention is to report sufficiently to enable us, and the public, to understand the actual and potential liabilities?

Ian Pearson: I was about to respond to the hon. Gentleman's question, before making a couple of further comments to the right hon. Member for Wokingham. We want to be as open and transparent as possible in reporting Government spending and Government liabilities, and we will seek to be so. We also consider it important for sufficient information to be provided by the Bank of England about its activities.
	The right hon. Member for Wokingham asked about the removal of the requirement for the Bank to produce a weekly return. That does not mean that the Bank can provide financial assistance without any reporting. As my noble Friend Lord Myners said in the other place, the Bank will consult on what form of reporting will replace the weekly return. The aim of this provision and others like it in the Bill is to provide for a limited delay for disclosure of assistance to allow enough time for that assistance to be effective. That is similar to what we are saying about Government transparency.
	The right hon. Gentleman also described a number of important processes for the Government to undertake when injecting share capital into a bank. We are very familiar with those processes, which we followed to the letter in the recapitalisations of the Royal Bank of Scotland, HBOS and Lloyds TSB. I fundamentally disagree with the right hon. Gentleman if he is suggesting that he did not consider recapitalisation to be necessary at that time.
	We welcome the acknowledgement by the hon. Member for Fareham that the Government have been listening both in Committee in the Commons and in the Lords. Transparency is important, and we consider that our amendment strikes the appropriate balance. I hope that the House will support it, and all the Lords amendments except Lords amendment 83.
	 Lords amendment 83 disagreed to.
	 Government amendment made in lieu of Lords amendment 83.

Clause 4
	 — 
	Special resolution objectives

Ian Pearson: I beg to move, That this House agrees with Lords amendment 1.

Mr. Deputy Speaker: With this it will be convenient to take Lords amendments 2 to 6.

Ian Pearson: The amendments deal with some of the introductory clauses in the Bill on special resolution regime objectives, the content of the code of practice and the banking liaison panel. I believe that they reflect the Government's constructive response to concerns expressed in all parts of both Houses on elements of the SRR framework.
	Lords amendment 1 deals explicitly with the concept of continuity of banking services within the SRR objectives as set out in clause 4. The Bill already includes, at its heart, provisions that are aimed at ensuring continuity of services. The very purpose of the stabilisation tools of the special resolution regime is to ensure that banks do not fail completely, thereby maintaining full continuity of banking services. This is already reflected in both the objectives set out in clause 4 and the draft code of practice under clause 5 that explains them. However, for the avoidance of doubt, this amendment seeks to make it clear that the SRR objectives include the concept of continuity of banking services. Hon. Members will note that this is included as part of objective 1, to protect and enhance the stability of the financial systems in the UK. To be absolutely clear, this drafting is entirely consistent with the fact that this concept also relates to the objectives to protect and enhance confidence in the banking systems and to protect depositors. I would also like to make it clear that continuity of banking services is not the only element to be considered under objective 1. The amendment therefore does not limit the scope of that objective in any way, but it now makes it explicit in the Bill that this concept is at least one of the elements that must be considered.
	Government amendments 2, 3 and 4, which were brought forward from another place, add to the list of matters that the code of practice may address and the concessions that were agreed in the other place. Members in another place requested further clarification on a number of matters or expressed a desire that the code of practice should include further information, and I recall that similar expressions of interest and concern were also made in Committee in this House.
	Clause 5, and in particular subsection (1), sets a broad remit for the code of practice. In response to points made in debates here and in another place, the Government have agreed that further information should be added to the code and that it is appropriate to signal that in clause 5. These amendments therefore achieve the following. First, they signal that the code can provide information about how the SRR objectives are to be understood. That follows on from an Opposition amendment in another place, but the Government's amendment goes further by explicitly signalling in the Bill that the code can include information on how the terms within all the SRR objectives are to be understood. Secondly, the amendments expressly state that the code can provide further guidance on the choice between the stabilisation options. Questions were raised in both Houses about the factors that will determine the choice of one tool over another, and the truth is that these decisions will be made on a case-by-case basis. Consequently, the code is the right place to provide significant additional information on this matter. The draft code already lists factors to be taken into account when deciding between different options and the Government believe it could include more information on that point.
	The final two Government amendments in the group add further to the list of areas about which the code can give guidance: continuity obligations and compensation arrangements. Those additions were a response to two parts of the debate in Committee in another place. As I have stated during other stages of the Bill's passage, I believe that the code provides a useful addition to the architecture of the new special resolution regime. The Government have listened carefully to the points made in debates and the representations we have received, and we believe that these amendments will help provide reassurances that further information can, and should, be provided on a number of important elements of the SRR. These amendments were welcomed in the other place, and I commend them to the House.
	In Committee in the House of Lords, Lady Noakes proposed an amendment to widen the remit of the banking liaison panel. As Members will know, I was keen that we set up an expert liaison panel to provide advice and assistance and to help us co-produce some of the secondary legislation. The Government agreed with the main thrust of Lady Noakes's proposal. The Government's position, which has not so far been controversial, is that it would not be appropriate for the banking liaison panel to provide advice to the Treasury on the operation of the SRR powers. For example, it would not be appropriate for the panel to advise on the drafting and placing of a transfer or associated instrument. However, I believe that we have come to a consensus that the panel's remit should include the effectiveness of the policy and the powers in general of the SRR. One concern raised in another place was to ensure that the panel will have a role in monitoring the market for unintended consequences of those new powers. The Government, therefore, tabled these amendments to meet those concerns.
	Lords amendment 5 provides the panel with a broadly defined purpose to advise the Treasury on the effect of the SRR on both the banks that are potentially subject to it and the wider financial services markets. In addition to this broad purpose, Lords amendment 6 also provides the panel with a statutory remit to advise the Treasury on the code of practice. It also provides that the banking liaison panel should advise the Treasury on the exercise of the power to change law under clause 75—on which we had considerable debate in the Committee stages—with the exception of cases where the exercise is carried out in connection with, or to facilitate, a particular use of a stabilisation power.
	The Government's decision to establish the expert liaison group has been welcomed by interested parties, and the group has already provided invaluable advice. I hope that when it is re-constituted as the banking liaison panel, it will continue with this good work. The Government amendments proposed today will ensure that this work is given a firm and broad statutory basis, and I commend them to the House.

Mark Hoban: The Minister said in his concluding remarks on the previous group of amendments that the Government were prepared to listen, but sometimes they do not listen immediately and it can take a while for the message to sink in. I was struck by Lords amendment 1, proposed by Lord Myners, which would add a reference to
	"the continuity of banking services"
	to the objectives, because in Committee in this House I introduced an amendment to incorporate the continuity of banking services into one of the objectives of the special resolution regime. It therefore seems that the message eventually sank in that it is important to make sure that there is a reference to the continuity of banking services in those objectives. This is an important matter, and I wish to consider it briefly.
	One of the contrasts in how different events have been handled over the past few months is in terms of the continuity of banking services. Depositors with some of the Icelandic banks—such as those who found their accounts flipped across from Kaupthing or Landsbanki to ING—will have seen the continuity of services in action, in that they were able to access their money almost immediately. However, those depositors who were not with the internet banking arm of those two Icelandic banks had to await payment through the Financial Services Compensation Scheme, and it took several weeks for them to receive their money. Clearly, if we want to give people confidence in the financial system, the fact that we can demonstrate that there is continuity of service is an important way of responding to their concerns. That would help in giving depositors a sense of confidence in how problems will be handled in future. I am therefore glad that there will be a reference to the continuity of banking services in the objectives.
	One feature of this debate, which we have now been having since autumn last year, is the banking reform package that has been proposed. It has three elements: the Bill that is before the House today, the secondary legislation that will be brought forward at the appropriate time, and the code of practice. The package needs to be looked at altogether. The Bill gives significant powers to the Government, secondary legislation will implement them, and the code of practice is important in giving confidence to the banks and other financial institutions and their advisers about how the powers will be used in practice. They can take comfort from the code as to how the powers will be applied in future. We spent a great deal of time in Committee discussing the code of practice. The Minister ensured that we saw a draft of it then, and I was grateful to him for doing so. Lords amendments 2, 3 and 4 are important in that they increase the comprehensive nature and coverage of the code of practice to ensure that the objectives themselves are understood. The Bill's original drafting said that the code could provide guidance on
	"how to achieve the special resolution objectives".
	Lords amendment 2 inserts the word "understood" into the provision to ensure that there is a clear link between the objectives in the Bill and the way in which the Government will seek to achieve them once it is enacted.
	As the Minister pointed out, significant debate took place in Committee about the stabilisation options and what preference there would be in terms of their use. I tabled an amendment in Committee ranking those options in order of preference, with a private sector solution coming first, a bridge bank second and temporary public ownership or nationalisation as the final preference. Although he listened to my proposal, he rebuffed it on that occasion. We wanted to help people understand how the stabilisation options would work and what factors the Government would bear in mind when considering which option to use to deal with a bank crisis.
	Lords amendment 4 inserts more specific guidance on clauses 63 and 66, and on the compensation clauses—those are welcome additions to the remit of the code. Continuity of service is a very important concept in protecting consumers. Clauses 63 and 66 look at continuity of service in a different way, by imposing service obligations on contractors or other suppliers where there has been a share or property transfer, which is part of the means by which the stabilisation options are put into practice. There was concern as to how those provisions would work, and the fact that they are to be included in the code of practice helps in establishing that.
	The second part of that amendment relates to the important issue of compensation. The Bill gives the Government significant powers to vary the rights of creditors—people who have entered into a borrowing or lending relationship with the bank or the shareholders, or with suppliers. Normally, suppliers would be able to enter into a contract whereby if there is a significant change in the person with whom they are contracting, they would have an option to terminate the contract, but that goes against the thread running through this Bill of minimising disruption to the financial system and ensuring continuity of service. It is important for suppliers to know what will happen when these powers are invoked, and it is right that that exercise is reflected through the code of practice.
	On Lords amendments 5 and 6, the Minister at an early stage identified the importance of expert advice and guidance on this Bill. This House is dealing with complex and wide-ranging powers in this Bill, and it was right to ensure the liaison panel's involvement in its evolution over the past few months. I know that a number of discussions have taken place between the Treasury and the members of that panel about the Bill and the secondary legislation. The ongoing engagement between the Treasury and the various experts is welcome, and we are pleased to see the extension of the group's remit. We want things such as the impact of the special resolution regime on banks, their customers and the financial markets to be examined, because the purpose of the code, the panel and so on is to ensure that this legislation does not damage the UK's financial markets, but strengthens them. The best way to do that is to ensure that there is proper engagement with outside interest groups, and Lords amendments 5 and 6 put the panel's future involvement on a statutory basis.
	I wish to press the Minister on one aspect of the panel. My hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) asked whether the minutes of the panel would be published—whether there would be some more transparency about its deliberations and contributions to the formation of legislation, and its future role. The Minister said that he had no specific objection to this, barring concerns about market sensitivity, and would go away to reflect.

Ian Pearson: My view is that this is a matter for the banking liaison panel—if it wants to publish its minutes in full or in a truncated version, it should be allowed to do so.

Mark Hoban: I am grateful to the Minister for that response. It shows a degree of openness, and that is important in ensuring that there is proper transparency in the arrangements and that people are fully aware of the market view of some of the issues associated with the impact of the Bill. His response shows, again, that the Government have been prepared to listen on this, and I welcome those remarks and the amendments in this group.

John Redwood: Lords amendment 1 invites us to modify special resolution objective 1, as set out in clause 4. The Bill invites us to approve five objectives. That seems rather a lot to me. When I examine the objectives carefully, I see that objectives 1 and 2 are similar. Objective 1 is
	"to protect and enhance the stability of the financial systems of the United Kingdom."
	Objective 2 is
	"to protect and enhance public confidence in the stability of the banking systems of the United Kingdom."
	That is a sort of spin-age version of objective 1. I put it to Ministers that the spin would take care of itself if there were stable, confident and inspiring financial systems—that would indeed inspire public confidence. No spin strategy will inspire confidence if the systems are rotten. Perhaps objectives 1 and 2 amount to the same thing and could be merged, and could then take the added strain of Lords amendment 1. It states that
	"the reference to the stability of the financial systems of the United Kingdom includes...a reference to the continuity of banking services."
	As my hon. Friend said that that proposal emerged from an idea of his, I shall be careful in what I say about it, but I seek clarification on the Government's phrasing. I am happy if the provision refers to the need to carry on lending to people and companies, particularly those in the United Kingdom. I do not wish too much of that business to be interrupted by whatever changes need to take place in the banking system because of the imaginary crisis that we are hypothesising. I am obviously happy if this is just another way of saying that we want deposit protection; indeed, one of the objectives is, rightly, to protect depositors—that would be the main purpose for which one would undertake these interventions. However, the provision may refer to the continuity of the banking services as supplied by the failing bank, and that is not what we should be providing for at all. Perhaps the provision needs tweaking to make that clear, as I am sure that my hon. Friend did not want to see that type of continuity.
	If a bank starts to get into trouble, we need a change, and perhaps a dramatic change. One of my worries about this process, as teased out by the amendments, is that that might not be achieved in the most obvious or cheapest way. The three stabilisation options are: transfer to a private sector purchaser, transfer to a bridge bank or transfer to temporary public ownership. There should be a fourth option, which should be tried first, in which the central bank would act as the banker to the failing bank and make short-term loans, with many strings attached, including management change, cost reductions and adoption of a different business model—all the things that would normally be tried before deciding that a bank was finished. The problem is clearly bad management, and the first thing to do, before lending the bank more money, is to demand a strengthening of, or a change in, the management.
	My worry is that the system laid out in amendments 1 to 6, buttressing and changing the special resolution regime, will be soft on bankers and soft on bankers' bonuses. We should not be soft on those things when top bankers run banks badly and then seek some form of public assistance or intervention. We need a system that will allow us to remodel failing banks and take tough action to tackle failing management—obviously by agreement with the shareholders, as they are private sector banks. That would be a better approach than moving immediately to one of the three stabilisation options.

Ian Pearson: The special resolution regime will apply when a bank is clearly failing. The right hon. Gentleman should rest assured that many steps would be taken before determining that a bank was failing and the threshold conditions had been met. The issues that he is talking about do not need to be part of the Bill, because it is about stabilisation of a failing bank. The actions that he is referring to will have been taken—or at least considered and evaluated—before that point is reached.

John Redwood: That is a helpful intervention and I am reassured a great deal by it. The model of the intelligent central bank and the generation of management change can often represent a better and cheaper way forward and should be tried before these rather more draconian steps under the SRR.
	I would also appreciate some reassurance that "continuity of banking services" does not mean continuity of management, management practice, management bonuses and bad practice in failing banks. Those factors need to be changed as quickly as possible to limit the damage. If continuity means that the brand and the management must carry on, that could perpetuate a situation like the one that we have at the moment in which never has so much been spent by so few to so little effect. Huge sums of money are tipped into the big bad banks, and if change is not generated quickly enough at the top, the taxpayer is lumbered as a lot of money goes into the banks to no immediately apparent good effect. It is estimated that £1 trillion will be spent on fixing the banks, but we could fix an awful lot in Britain if we spent that sum on something other than banks. That is why resentment is building up.
	We need to ensure that we try the easy steps first before we move on to the wider regimes. It would be sensible if the objectives were slimmed down a bit. They should obviously include protecting public funds and depositors. They also include the general aim of financial stability. The continuity requirement should mean preserving a worthwhile business, not necessarily preserving a management style or brand. In the case of Northern Rock, the Government had good intentions when they nationalised it, although I thought that there were many cheaper and easier ways to save it. The first reaction on nationalisation was to put it in run-off, so far from preserving its contribution to the system, it ran down its mortgage book and sacked its staff—not perhaps what the Minister's colleagues expected from nationalisation. If we accept the amendments, it would be easier in the future to try to create continuity, and that would be welcome, because it is ridiculous to nationalise something and then run it down and sack the staff. The business should continue trading in one form or another, although it needs quick management change, a change of culture, a different approach to risk and, perhaps, to marketing and branding. However, it is a waste of money just to close it all down.

Ian Pearson: I welcome the comments from the hon. Gentleman, who supported the amendments. The right hon. Gentleman posed several questions, most of which were explored intensively in Committee in both Houses, as I am sure he would appreciate. He raised the issue of continuity, which is one of the key considerations in dealing with a failing bank. We are talking about continuity in terms of providing a continuous service for customers. For individuals, that will mean ensuring that they can have their monthly salary paid and write cheques as usual. Continuity of banking services for businesses is also important. We need the SRR objectives and the amendments will add value to the Bill.
	 Lords amendment 1 agreed to.
	 Lords amendments 2 to 6 agreed to.

Clause 22
	 — 
	Termination rights, &c.

Ian Pearson: I beg to move, That this House agrees with Lords amendment 7.

Mr. Deputy Speaker: With this it will be convenient to discuss the following: Lords amendments 8 to 16.
	Lords amendments 18 and 19.
	Lords amendments 21 to 30.
	Lords amendments 32 to 45.

Ian Pearson: This group of amendments covers two broad but interrelated issues: default events and partial transfer safeguards. The majority of the amendments made in the other place have been in response to the concerns of stakeholders and reflect the approach that we have adopted—to listen and to try to build consensus.
	As hon. Members will know, we have tried throughout this Bill to balance the need for the authorities to have the right powers to effect a successful resolution with the right protections to protect legal certainty and market confidence. The Government have sought to consult stakeholders and provide the protections that precisely target their main concerns. Admittedly, that approach has taken numerous consultations and several amendments to the Bill, but I do not apologise for that. The Bill is certainly much improved as a result. With that approach, which includes the safeguards in secondary legislation, we have got the balance right. I wish to place on record my thanks to stakeholders and members of the Opposition for working with us to achieve that overall result.
	I do not propose to cover the detail of the amendments at any great length. As I have said, they are the result of numerous rounds of consultation and co-operation between all concerned. Baroness Noakes provided my noble Friend the Financial Services Secretary and Minister for the City with an opportunity to read into the record, at some length, the technical detail of and effect achieved by each amendment.
	I propose instead briefly to summarise the amendments. They achieve two things. First, they amend various technical definitions in the Bill to provide complete certainty on important legal concepts including termination rights, trust interests, and set-off and netting. Secondly, they provide a balance between, on the one hand, the legitimate interests of bank and third-party counterparties in being able to contract with certainty for termination rights where set-off and netting arrangements are involved in financial contracts and, on the other hand, the ability of the authorities to transfer banking business to a new company—either a private sector purchaser or a bridge bank—with certainty over what contracts have been transferred.
	The balance is achieved via the mechanism of the conditional transfer provided for in an amendment to clause 34, which will be backed up by the necessary safeguards to be made under clause 47. I can, of course, provide more detail on these matters should any hon. Member wish me to do so. However, as I have said, they have been extensively explored in the other place and put on the record there.

John Redwood: I can see that these are important technical matters, and I would appreciate a reassurance on them from the Minister. Rapid resolution of these issues if a company goes under or gets into difficulties is terribly important for lots of better run businesses that are relying on the counterparty arrangements. Have the Government made any progress in ensuring that that resolution can be done quite speedily?

Ian Pearson: I certainly agree that speed is important, particularly when it is needed to exercise the special resolution regime and to decide which of the stabilisation options to pursue. People will often be acting in a highly pressurised situation where decisions need to be made quickly. We think that the Bill and its provisions are fit for purpose, and they work as far as stakeholders are concerned. I think that it is fair to say that most discussion has been on partial transfers and safeguards and the impact on counterparties. That is why we have taken a substantial amount of time to try to get this right by working with stakeholders. That is why I expressed my thanks to those who have worked with us. We believe that we have a compromise that has broad support.
	As I said, the Government have always acknowledged the invasiveness of the powers to switch off termination rights and make partial transfers. With these amendments, I believe that agreement has been reached that the necessary safeguards have been put in place, imposing suitable restrictions on the powers of the authorities. We have worked closely with stakeholders through the expert liaison group and through scrutiny in this House and the other place. We have also worked with further external stakeholders who have made a number of valuable points during all stages of the Bill. The Bill now provides the right balance between targeted protections for the market and appropriate powers for the authorities to effect successful resolutions of failing banks.

David Gauke: First, may I express my agreement with the Minister about the importance and sensitivity of this subject and acknowledge that the Government have sought to consult stakeholders widely? They have certainly involved us in the discussions. I pay tribute in particular to my noble Friend Baroness Noakes, who was heavily involved in discussions with the Treasury, the expert liaison group and various stakeholders. I acknowledge that the Government have granted us and my noble Friend that opportunity. It has been clear throughout that the Minister in this place has been aware of the difficulties with these subjects. He has been keen to listen to representations from outside groups as well as from Members of this place and the other place.
	It is perhaps worth reiterating briefly the particular issue that applies with partial property transfers, to which my right hon. Friend the Member for Wokingham (Mr. Redwood) alluded in some respects. When a bank is in difficulty and finds itself entering the special resolution regime, it might find that some properties and contracts are transferred to a bridge bank, for example, whereas others remain in the residual bank. The counterparty contracting with that bank might face considerable difficulty. Normally, that counterparty would be able to net or set off the various contracts with one party, but it would now find that it was contracting with two parties and that netting and setting off might not be available. That substantially increases the risks involved for that counterparty. In this field, that has considerable consequences on things such as regulatory capital. A regime that does not adequately address the issue will have an impact on the competitiveness of the UK banking sector at a time when that would be most disadvantageous.
	It is right that this matter has been closely scrutinised throughout the progress of the Bill. It is right that the other place considered the subject very closely and made a number of amendments, which are before us. Before I raise one or two questions about the amendments, I want to make one point about the scrutiny.
	The Government have done their best and have tried to consult widely, but the nature of the legislation and the desire to push forward with the Bill within a restricted time frame could mean that additional issues come up. As it happens, I was contacted yesterday by an expert in private international law who raised concerns about the definition of foreign property in clause 39. It would be inappropriate to raise those points at this stage, but I mention that merely to highlight that there might still be issues that need to be addressed. Of course, a great deal of the legislation is dependent on the secondary legislation, which might in some cases have been published but is yet to receive approval. I hope that the cross-party consensus and co-operation on the primary legislation will continue when we come to the secondary legislation.
	Let me turn to the specific issues. Amendments 7 to 10 and 21 to 24 relate to clauses 22 and 38, which are to do with the circumstances in which it might be necessary to disregard either a share transfer or a property transfer as an event of default. We accept that without these provisions it might be impossible for a bank to continue to operate when a counterparty—we are not necessarily talking about financial counterparties and could be talking about service providers, for example—might have the opportunity to walk away from their contract because an event of default would have been triggered by the share transfer or the property transfer.
	Yesterday, Lord Myners referred in the other place to "wide counterparty flight", and that is the issue here. The provisions have been expanded to address the question of conditions precedent and the concern about that that has arisen during the Bill's progress through the Parliament. Given that we are dealing with new wording that has not been debated in this House before, will the Minister say something about the thinking behind amendments 10 and 24, in particular? What are the circumstances that he is concerned about, and how was the problem drawn to his attention?
	I turn now to amendment 18 to clause 34, which states that a transfer may be conditional on a certain event or situation occurring. Will the Minister give the House a little more information about what sort of events or situations he thinks may trigger a transfer? I can see that the proposal has the advantage of flexibility: the case made for the clause as a whole is that it provides greater certainty to the transferee and protects those who have contracted with the original bank, and those are both worthy objectives.
	I also note that Lord Myners also remarked in the other place yesterday:
	"The early indication from consultation with stakeholders is that this approach will be supported."—[ Official Report, House of Lords, 9 February 2009; Vol. 707, c. 966.]
	I believe that that is right, and my noble Friend Baroness Noakes endorsed the observation, but some people might be a little concerned about the use of the phrase "early indication". How widely have the Government consulted on the approach set out in amendment 18? Are they satisfied that it enjoys widespread support?
	Finally, various essentially technical amendments are proposed to clause 48, which provides the power to protect certain interests. That is where the safeguards lie, and where the protections for counterparties exist. At many stages in the Bill's passage through Parliament, we have debated why more safeguards cannot be included on the face of the Bill. Why not go further and exclude financial contracts altogether? My understanding is that the financial collateral directive excludes the majority of financial contracts from this area, but not all of them. I should be grateful if the Minister would update the House about the Government's thinking on this matter, and provide a little more information about the progress that will be made on the relevant statutory instruments.
	The real substance of the legislation in this area will be set out in the statutory instruments, and it is not necessary to go once more through the whole debate about the balance between statutory instruments and primary legislation. No doubt the Minister will argue that there is a need for greater flexibility, but it would help the House if we had a little more information about what progress will be made.
	These are very technical matters, but they are hugely important. The Minister has acknowledged that throughout, and we welcome the real progress that has been made in the House of Lords. However, I hope that the Government will continue to review this area and communicate with the banking liaison panel even after the secondary legislation has been passed. If any difficulties arise, such as market uncertainty or a loss of confidence, I hope that the Government will be prepared to return to the issue as a matter of urgency.

Ian Pearson: As the hon. Member for South-West Hertfordshire (Mr. Gauke) rightly notes, these are technical issues, but in many instances they are absolutely crucial for ensuring legal certainty. It is important that the detail is got right, and that is one reason why we have had the extensive consultation that I mentioned earlier. I can certainly assure the hon. Gentleman that the banking liaison panel will monitor the legislation, and we also want to use it in the wider role that I have announced previously. If problems arise, we want to be able to take the widest possible advice about potential solutions.
	I shall respond briefly to some of the technical points that the hon. Gentleman raised. I am sure that the banking liaison panel will continue to look at any further technical issues that may arise, but the hon. Gentleman asked about conditions precedent. That provision is already in commercial use and could easily be substituted for a termination right. Since the Bill was introduced, the authorities have been concerned that the definitions used in it did not cover the conditions precedent device with absolute certainty.
	For example, a contract may provide for B to perform an obligation in favour of A, but only when one of a number of specified events has or has not occurred. Typically, those events would be similar to events that would entitle a party to terminate a contractual arrangement—such as non-performance by A of his obligations to B, or matters relating to A's creditworthiness. As a result, the Government consider it essential to leave no doubt that devices such as conditions precedent are caught by the Bill, and have introduced amendments to achieve that. Otherwise, counterparties could seek to opt out of the special resolution regime, and private sector purchasers might be reluctant to accept transfers of banking business, for fear that they would be ineffective.
	The hon. Gentleman asked how the conditional transfer under amendment 18 would work. Its aim is to prevent counterparties from closing out against the transferee simply as a result of the transfer, while at the same time preserving their termination rights against the residual bank. I emphasise that that does not prevent the counterparty closing out should the transferee breach the obligations that have been assumed.
	An unfettered right to close out against the transferee or new company carries potential risks for the resolution. The new company could immediately be required to pay crystallised liabilities, and that could create liquidity stress. Moreover, a counterparty that closed out on such a basis would have acquired a better right than it had in the first place, namely the right to close out not against a failing institution but against the more creditworthy bridge bank or private sector purchaser. That is not the same as the termination right for which the counterparty had contracted, and the Government believe that the amendment to clause 34 offers a way of overcoming that concern.
	Government amendments 14, 18 and 28, among others, concern default events. Amendments 14 and 28 respond to concerns raised by interested stakeholders about the drafting of clauses 22 and 38, and I shall give the House an example of how we have worked. My noble Friend the Financial Services Secretary arranged a meeting between Treasury officials, parliamentary counsel, and the City of London Law Society to resolve these problems. The amendments are the result of the concerns that have been addressed.
	We have always been clear that the purpose of the clauses is not to prevent termination rights from being exercised when the transferee defaults on the obligations that they assumed. If a party assumes a contract under transfer, and then breaches an obligation under that contract in a way that is unrelated to the transfer, the counterparty should be able to exercise any right to terminate the contract that may arise in consequence. Interested parties thought, for technical reasons, that the drafting did not achieve that outcome, and although we did not agree, we were happy to respond to those concerns by bringing forward amendments that are intended to dispel any doubts that might exist. That is another example of the consensual approach that we have adopted.
	Finally, I turn to Lords amendment 18, to which the hon. Gentleman referred. It relates to clause 34. The amendment is part of a Government package to respond to the concern that the powers relating to default events would lead to market uncertainty for financial contracts, particularly those with set-off and netting arrangements. I should make it absolutely clear that under the financial collateral arrangements directive, the Government must allow financial collateral agreements to take effect in accordance with their terms, including by respecting terms that commit the counterparty to closing out. As the hon. Gentleman is aware, we are talking about a minority of financial contracts that are not protected under the directive. I do not have the technical expertise to go into the detail of what those contracts are, but I gather that those who understand these matters know what we are talking about.
	The hon. Gentleman asked how widely we had consulted on some of the issues. The best response that I can give is to say that we have consulted influential legal advisers on our approach. The indication is that they will advise clients that clean legal opinions can be provided. We will publish draft orders on Royal Assent, which hopefully will be received this week, and will make the statutory instruments on commencement next week. It is right that we continue to make progress on those issues. A significant number of technical issues have been addressed in the amendments, but we will of course want to continue to keep them under review. The banking liaison panel is a useful forum that will enable us to do that.
	 Lords amendment 7 agreed to.
	 Lords amendments 8 to 16 agreed to.

Clause 24
	 — 
	Procedure: instruments

Ian Pearson: I beg to move, That this House agrees with Lords amendment 17.

Mr. Deputy Speaker: With this it will be convenient to discuss Lords amendments 31, 46 to 48 and 58.

Ian Pearson: The Government brought forward Lords amendments 17 and 31 in direct response to amendments proposed in Committee in the other place by Baroness Noakes. Her amendments proposed that when a share or property transfer instrument is made by the Bank of England, the Treasury should lay it before Parliament. The Government reflected carefully on that, and the additions to clauses 24 and 41 are the result of that reflection. Under the amendments, if the Bank of England makes a share or property transfer instrument, the Treasury would be required to lay a copy of it before Parliament, thereby allowing Parliament direct access to the instrument. The amendments respond directly to concerns raised by the Opposition, and they reflect our constructive response to the recommendation of the Delegated Powers and Regulatory Reform Committee that the House should reflect on the degree to which the instruments are subject to parliamentary accountability.
	Hon. Members, especially those who were members of the Public Bill Committee, may recall that misgivings were expressed in this House about the term "subserviate", and those misgivings were shared by Members in another place. The Government therefore brought forward an amendment to replace the term "subserviate" with a new subsection to clause 58. I have no problem with the word. Technically, one could say that the Prime Minister subserviated me to the Chancellor of the Exchequer and the Secretary of State for Business, Enterprise and Regulatory Reform. It is clear what we mean by the term.
	However, for the avoidance of doubt, and to reflect concerns raised in the Commons and the other place during the Bill's passage, Lords amendment 48 states in plain language our intention, which is that the management should have a duty to manage a bridge bank, or bank in temporary public ownership, in a manner that maximises the proceeds available in a bank resolution fund only so far as the duty is compatible with the special resolution objectives and the code of practice. I hope that the amendments satisfy both Houses' concerns on that point; again, the amendments demonstrate our willingness to respond helpfully on such matters, even though in this case we are talking about a linguistic change, rather than a detailed policy change.
	Government amendment 58 requires the Treasury every year to lay before Parliament a report on the activities of any bank in temporary public ownership. That is a direct response to concerns, expressed here and in anther place, that there were insufficient reporting requirements placed on banks taken into temporary public ownership. There are numerous ways in which the Government are accountable to Parliament for their role with regard to banks in temporary public ownership. Parliament can already request Treasury Ministers to report on the activities of a bank in temporary public ownership whenever it wishes, including, should it so desire, more frequently than once a year. Furthermore, all the usual accounting and reporting requirements under the Companies Act 2006 will apply to banks in temporary public ownership. However, having reflected on the matter, the Government are persuaded that it would be helpful to include an express requirement to produce a report on the activities of a bank in temporary public ownership. That is why I commend Lords amendment 58, and the other amendments in the group, to the House.

Mark Hoban: I shall deal first with Lords amendment 58, which requires the Treasury to publish annually a report on banks that have been nationalised under clause 13(2). As the Minister said, the amendment was tabled in response to concerns expressed in the other place. My noble Friend Baroness Noakes tabled a much more extensive amendment, which specified the information to be published. It referred not just to those banks that are nationalised or taken into temporary public ownership under this Bill, but to those that were nationalised under the Banking (Special Provisions) Act 2008. That Act expires later this month, and the Bill will replace it.
	My noble Friend's amendment was much more specific than the Government amendment, in that it required the Government to publish a report covering the financial position of a nationalised bank and its plans and prospects, and any guarantees in respect of a bank that might need to call on Government funds. It also had a catch-all provision that required the Government to publish anything else that they thought was relevant. Where amendment 58 falls down is that it does not give much information on the type of report that we should expect the Treasury to lay before Parliament.
	Will the Minister be more explicit about what we will see in the annual report? I assume that it will be more than just the report and accounts that all companies are required to publish under the Companies Act 2006. Will it include a statement on the bank's business plan, and how it measures up against that plan? Will the Government commit to publishing the objectives that they set management, and what progress is made on them? Will the report deal with the impact that a nationalised bank has on competition in the financial sector? We touched on that point in Committee. A bank in temporary public ownership may be seen to have an advantage over banks that are free of Government control. The Government responded to the concerns that were expressed at the time about the way that Northern Rock could take advantage of the savings market. If comparable situations arise in the future, will the Government, under this requirement, produce a report setting out the impact that a nationalised bank has had on the market?
	The Minister said that reports can be produced on a more regular basis. That is indeed important. In that respect, Northern Rock is probably a better example because not only does it publish its annual report, but it produces a half-yearly statement, as well as quarterly trading updates. It therefore exceeds the minimum set out in amendment 58 and offers a template for the level of transparency that would be expected from a bank in state control.
	A similar level of transparency has not applied to Bradford & Bingley, however. We have heard nothing about its financial condition since it was nationalised at the end of September. There has been no quarterly statement or update about its trading, and nothing about the level of arrears on its mortgage portfolio. That was touched on in the earlier debate about the buy-to-let properties that form part of its portfolio. We see a distinct contrast between the transparency applied in the approach to Northern Rock, and the different standard applied to Bradford & Bingley.

David Taylor: The hon. Gentleman is making the perfectly fair point that the content of the report ought to be spelled out in a little more detail than is provided for by the legislation. Does he agree that when a bank is apparently getting towards the end of its period of temporary public ownership, or some similar change is about to occur, it should be incumbent on the bank to report on the prospects for what is being widely discussed—in the case of building societies that were privatised into banks and then collapsed, people are looking at the prospects of their being remutualised on return to the private sector? Something of that kind is a possibility in a report some years down the line, is it not?

Mark Hoban: The hon. Gentleman raises an interesting point. He is an ardent advocate of the remutualisation of those building societies that became banks and are now in state control. The amendment tabled by my noble Friend Baroness Noakes provided for a report about the prospects. I can envisage that in a report with that level of detail, the prospects could include some statement about the exit strategy—how the bank emerges from the period of temporary public ownership.
	Clearly, one of the debates that needs to take place, for which my noble Friend's amendment created a vehicle, is how the Government intend those banks to exit the period of temporary public ownership. I recognise the points that the hon. Gentleman makes. A little more transparency about the exit strategy would be helpful for all of us when thinking about the future of both Bradford & Bingley and Northern Rock.
	A problem emerges from the lack of transparency that we have seen in the context of, say, Bradford & Bingley, and in the way that the Government's stake in the nationalised banks has been managed. There is very little transparency about the activities of United Kingdom Financial Investments Ltd. I asked the Chancellor of the Exchequer for details of the budget of UKFI. The Minister stonewalled that question in a parliamentary answer, and it is unsurprising that there is then press speculation about the arrangements for UKFI.
	It is important that the Government are open and transparent about the activities of the nationalised banks. It was a feature of the debate that we had a year ago on the Banking (Special Provisions) Act 2008, particularly in connection with Northern Rock. Although we welcome the fact that the Government have listened again to proposals made in the House of Lords to increase transparency, greater detail about the type of report that we would expect to see would be welcomed in the House this evening.
	I turn now to amendments 17 and 31. Of the three stabilisation options available to the authorities, two require transfer instruments to be made by the Bank of England. Those are the options relating to a private sector purchaser and a bridge bank. In the case of a bridge bank, a bank can be broken up and property transferred to a new owner, as happened with Bradford & Bingley and Banco Santander towards the end of September last year. If the Bill had been in place then, the Bank of England could have used a property transfer instrument to transfer Bradford & Bingley's branch network to Santander. Of course, there would have been remaining elements of the bank in temporary public ownership until a resolution or exit strategy had been found.
	Within the bridge bank mechanism there are elements that are similar to nationalisation or temporary public ownership. However, the transfer powers—this was the issue raised in the other place not just by my noble Friend, but by the Delegated Powers and Regulatory Reform Committee—are exercised by the Bank of England without parliamentary approval. The Delegated Powers and Regulatory Reform Committee, when considering those powers, argued that because they were similar to taking a bank into temporary public ownership, their use should be subject to parliamentary approval. In effect, because the original owners are deprived of their property rights, Parliament should approve that. It should not be an action that the Bank can take without scrutiny by Parliament.
	There was a vigorous debate on that in the other place. The outcome, as reflected in amendments 17 and 31, probably achieves the right balance. A copy of the share or property transfer instrument made by the Bank of England will be laid before Parliament. That will help to increase parliamentary scrutiny.
	My final remarks relate to amendments 46 to 48 and the use of the word "subserviate" in legislation. The Minister seemed to think the word was used in everyday parlance. Perhaps it is used quite often in his constituency, but it is not a word that I had heard until the Bill was presented to me. I checked yesterday whether there was widespread use of the word and Googled "subserviate". The first two results referred to an online dictionary, and—surprise, surprise—the next two references were to debates in this House and the other place.
	Clearly, "subserviate" is not a word that is widely understood. When the Minister gave his example earlier, I was not entirely sure it would have been clear in a press release what his relationship was to the Chancellor or to the Prime Minister, but perhaps the Minister does not use such language in the "Dudley Star" or whatever the local paper is in his constituency.
	I welcome the fact that the amendments have been made. The Minister ought to have a word with his noble Friend the Financial Services Secretary about how to concede the point gracefully. I read the debate in the Lords  Hansard, where Lord Myners said:
	"I do not think that the meaning of 'subserviate' is opaque or confusing. However, concern was also expressed in the other place, where the standards of learning are perhaps not as exceptional as in this House"—[O fficial Report, House of Lords, 2 February 2009; Vol. 707, c. 541.]
	I do not know what it is about Lord Myners, but if there is a Treasury course on tact and diplomacy in dealing with Members of this place, he ought to be the first in the queue. None the less, I am pleased that he listened to the concerns that my hon. Friend the Member for South-West Hertfordshire (Mr. Gauke) expressed in Committee. We shall not oppose this group of amendments.

Ian Pearson: It is a hiatus valde deflendus in the learning of the hon. Member for Fareham (Mr. Hoban) that he is not instantly familiar with the word "subserviate". That lacuna in his knowledge has now been addressed, and I hope that the word can be used in future legislation.
	The hon. Gentleman said that we had reached the right point with amendments 17 and 31, so I need not explain them any further. I will just say that we reflected on Baroness Noakes's amendments and that I appreciate the hon. Gentleman's support and his agreement that we have the balance right at the moment.
	The hon. Gentleman did some probing about what we could expect to see in the report introduced by Government amendment 58. We have had numerous debates about what should rightly be in a Bill and what should be done through codes of practice, secondary legislation or the normal course of Government reporting. We do not believe that the Bill should list the specifics of what should be included in every report. The bounds of commercial confidentiality need to be respected; we have to bear it in mind that banks in this situation will still be commercial bodies undertaking commercial transactions, and that there is rightly a duty of commercial confidentiality. However, while respecting that, we should still be as open and transparent as possible in respect of the information that we provide.
	I hear what the hon. Gentleman said about Bradford & Bingley. My understanding is that it will publish a version of the business plan on which it has been working. The hon. Gentleman will be aware of the reporting with regard to Northern Rock. As I outlined earlier, there are other opportunities, in addition to the annual report, for hon. Members to probe Ministers on banks in temporary public ownership.

Mark Hoban: I am grateful to the Minister for his comment about the publication of the Bradford & Bingley business plan, but when will we see the first set of accounts of Bradford & Bingley under public ownership? Will there be a quarterly update shortly, or will we have to wait for full-year results?

Ian Pearson: I do not have that information to hand. I expect that Bradford & Bingley will publish a version of its business plan, although naturally there will be some commercially confidential matters. If I get further information on that issue, I shall be happy to transmit it to the hon. Gentleman.
	The amendments have cross-party support; they come from the other place and they strengthen the Bill.
	 Lords amendment 17 agreed to.
	 Lords amendments 18 and 19 agreed to.

Clause 36
	 — 
	Continuity

Ian Pearson: I beg to move, That this House agrees with Lords amendment 20.

Mr. Deputy Speaker: With this it will be convenient to deal with Lords amendments 51 to 53 and 95.

Ian Pearson: Lords amendment 20 removed from clause 36 a subsection that made provision for tax. The clause deals with the maintenance of continuity when a transfer is made under the powers in part 1. The subsection was not needed in the light of the detailed powers on tax in clause 74, and I am grateful to the Opposition spokesman in the other place for drawing that to our attention and tabling the necessary amendment.
	Lords amendments 51 to 53 and 95 respond to comments made by the Delegated Powers and Regulatory Reform Committee, widely supported in the other place, about the parliamentary scrutiny of secondary legislation. The amendments switch the order-making power in clause 74 to the affirmative procedure; again, we have had many debates about whether matters should come under the negative or affirmative procedures. We are happy to support the amendments and the view of the Delegated Powers and Regulatory Reform Committee in that respect.

Mark Hoban: We welcome the fact that amendment 20 was accepted in the House of Lords and we are happy that it forms part of the amended Bill. However, will the Minister help me out on one issue? When the amendment was debated in the other place, the point was made that there were provisions under clause 74 that would allow the Treasury to make regulations about the fiscal consequences of the exercise of the stabilisation power. When a normal transaction takes place, there are fairly well established precedents about how tax should be dealt with; corporation tax, for example, is apportioned between the former owner of a company and its new owner, based on when the completion date was. There are mechanisms for calculating what the tax bill would be. Will the Minister explain a little more about what he thinks the fiscal consequences of the exercise of the stabilisation power will be and where the Government are on making regulations on that? That would be helpful.
	On Lords amendments 51 to 53 and 95, one of the themes running through our consideration of the Bill is that there should be proper parliamentary scrutiny of the secondary legislation, so we welcome the Government's moves to accept more situations in which regulations should be dealt with through the affirmative procedure rather than the negative procedure.

Ian Pearson: I welcome the hon. Gentleman's support for the amendments, particularly in respect of the decision to move to the affirmative procedure for scrutinising some of the secondary legislation.
	On the fiscal position, the Government will assess the range of likely tax consequences that follow from the exercise of the stabilisation powers, and we will bring forward any necessary tax provisions in due course. Explanatory material accompanying any tax provisions will set out further details about the basis on which the changes are to be made. I have nothing further to add to that at this point.
	 Lords amendment 20 agreed to , with Commons privilege waived.
	 Lords amendments 21 to 48 agreed to.

Clause 71
	 — 
	Pensions

Ian Pearson: I beg to move, That this House agrees with Lords amendment 49.

Mr. Deputy Speaker: With this it will be convenient to consider Lords amendments 50, 59, 60, 70 and 71.

Ian Pearson: The amendments provide for the extension of the provisions on temporary public ownership to bank holding companies. Hon. Members who served in Committee will remember that I first raised that matter then; I now return to the matter as the Government have laid the amendments in the other place. I hope that hon. Members will forgive me if I set out the issues in a little detail, as we did not have the opportunity to discuss them first in this House.
	During the course of developing and consulting on this Bill, the authorities have continued to consider the question of how best to resolve different types of failing banks. The events of autumn last year made it apparent that, in some cases, exercising a power conferred by the special resolution regime in relation only to the bank in a financial group may be problematic. Specifically, acting on the bank alone may not be sufficient fully to achieve the resolution objectives, particularly that of protecting and enhancing the stability of the UK's financial system. The starting point for this issue is that banks often form part of complex corporate groups. The company within the group with the deposit-taking permission—the bank—may not be the ultimate parent company within the group. In such circumstances, therefore, as originally drafted the SRR powers could not have been exercised against the parent company, but only in respect of the bank within the group.
	There are a number of reasons why a power limited to banks may be insufficient. First, the activities of the bank and the rest of the group may be so inter-related that the exercise of the transfer powers only in relation to the bank may be insufficient to resolve the bank successfully. Secondly, taking action only in relation to the bank may give rise to serious difficulties within the rest of the group, which is likely to include other financial companies that may be relevant for stability purposes. In certain cases, the exercise of the transfer powers in relation to the bank may so disturb the operation of and confidence in the group as a whole that it leads to the insolvency of some or all of the other entities in the group. Wherever such entities in the group are financial institutions, their failure may impede the achievements of the SRR objectives. In addition, the failure of other entities in the group may give rise to difficulties in the continued operation of the bank given the interconnectedness of the group. Finally, a private sector solution may be more likely on a group-wide than on a bank-only basis.
	I should like to note up front that the Bill already contains provisions that seek to address aspects of these potential difficulties. In particular, we have an obligation on group companies to continue to provide necessary services or facilities—"continuity obligations"—to the bank following an exercise of the transfer powers. However, the Treasury concluded that the imposition of continuity obligations, while remaining a vital tool in certain cases, may be insufficient to address the full range of difficulties outlined above. Therefore, as I signalled in Committee and on Report, amendments to extend the Treasury's power to take a failing bank into temporary public ownership to include bank holding companies were tabled in another place.
	Let me set out how these amendments work. Lords amendments 59 and 60 provide new clauses that allow the Treasury to take a holding company into temporary public ownership. As with any stabilisation option, there are significant conditions that must be met before the power may be exercised. A bank holding company may be taken into temporary public ownership only if the Financial Services Authority is satisfied that a bank in the group satisfies the general conditions set out in clause 7. In addition, the Treasury must be satisfied that it is necessary to take action for the purposes specified in the conditions for temporary public ownership set out in clause 9.
	In determining whether it is necessary to take such action in relation to the holding company, the Treasury will have to consider whether action in relation to the bank alone would suffice for the purposes specified in clause 9. I should also point out that, as with any stabilisation power, the exercise of the holding company temporary public ownership tool would be governed by the SRR objectives provided in clause 4 and subject to the code of practice provided for in clause 5, to which the authorities must have regard. I should also note that the power is limited to the Treasury. This approach ensures that Parliament can hold the Minister exercising powers in relation to a holding company directly to account. The Government consider that ministerial accountability is important given the breadth of interested parties that the holding company power may affect.

Peter Bone: I am trying to follow carefully what the Minister is saying. In circumstances where a large group, say a supermarket chain, has a banking sector and the bank needs to go into temporary public ownership, does that mean that the Government could end up owning a supermarket?

Ian Pearson: No. I shall go on to explain that in more detail.
	A group may contain entities that are not directly involved in the financial services sector, so the decision to resolve a bank on a group basis will involve balancing the interests of a range of parties against the public interest in resolving the difficulties caused by the failing bank. It is the Government's view that Ministers are best placed to make that judgment. Once a holding company is in temporary public ownership, the Treasury will have a range of powers available to it to transfer on the shares and property, rights and liabilities of the holding company.
	This approach has been adopted in order to provide the Treasury with appropriate flexibility to complete the resolution of each bank effected by the transfer to temporary public ownership of the holding company. All the limitations on partial property transfers provided for in clauses 47, 48 and 60, and secondary legislation made under them, will apply. I am happy to confirm, for example, that the netting arrangements will be protected in line with the order made under clause 48. Furthermore, the Government consider it appropriate to restrict the powers of the Treasury with respect to non-bank entities within the group. Therefore, the full range of onward transfer powers apply only to deposit-takers in the group and the holding company itself. We have adopted this position in order to minimise commercial uncertainties arising from the taking of these powers.

Mark Hoban: I am grateful for the Minister's comments, which clarify the Tesco point raised by my hon. Friend the Member for Wellingborough (Mr. Bone), which I was going to mention in my speech. The Minister referred to onward transfer powers being available only in relation to the interests of the holding company and the banking subsidiary. Does that mean that where there are other financial services businesses in that group, such as insurers and fund managers, there will be no onward transfer powers in respect of those entities?

Ian Pearson: My understanding of the situation is that that is correct. Let me explain in a bit more detail.
	As I outlined, the Treasury may take a holding company into temporary public ownership only under the purposes set out in clause 9—that is, if it is
	"necessary to resolve or reduce a serious threat to the stability of the financial systems of the United Kingdom"
	or
	"necessary to protect the public interest"
	where financial assistance has been provided. "Necessary" is a high test, and as part of that test the Treasury will have to consider whether resolution of the deposit taker would meet the specific conditions set out in clause 9. It is possible to address the purposes specified in clause 9 by taking action in relation to the deposit taker. It would not be necessary to take action in relation to the holding company. That emphasises that action in relation to the holding company is very much a last resort.

Mark Hoban: Going back to the use of onward transfer powers for the holding company and the licensed deposit taker, if a group is a broadly based financial services group, as many of the deposit takers in this country are, what process will be used to leave, say, the insurer or the fund manager in the ownership of the original shareholders if the holding company has been subject to an onward transfer process?

Ian Pearson: I explained that "necessary" is a high test. The second point to make is that the Treasury will also have regard to the SRR objectives, which ensure that the objectives in exercising the power in relation to holding companies include protecting and enhancing the stability of the financial systems of the UK, protecting and enhancing public confidence in the stability of the banking systems of the UK, and protecting depositors—areas with which we are very familiar. Action could be taken only where the Treasury has considered whether exercise of the powers in relation to holding companies would further those objectives. That narrows the context of what we are talking about. Thirdly, by limiting the tool to temporary public ownership, a higher public interest test must be satisfied, which we previously debated.
	The application of the safeguards will always depend on the facts of the case. However, in the light of those safeguards it is highly unlikely that it would be possible for the Treasury to take a holding company into public ownership where the holding company does not have a close connection with the operation of the bank or where the primary activities of the holding company are not related to financial circumstances. Onward transfer powers apply only to banks in the group and the holding company, not to other non-financial institutions. I hope that that helps to clarify the matter.
	Let me briefly turn to the other amendments in this group. Clause 71 provides for a transfer instrument or order to make provision about pensions. A modification to a pension scheme may be necessary in order to facilitate a fully effective transfer. The clause applied only to pension schemes in which the failing bank is or was an employer. However, following consideration, the Government are of the view that it does not provide sufficient flexibility for the authorities to deal with all possible resolution scenarios involving group companies. Therefore, Lords amendments 49 and 50 allow the pensions power in clause 71 to take effect at a group level, instead of at the level of the deposit taker.
	Finally, Lords amendments 70 and 71 make consequential provision to part 3 of the Bill in relation to the bank administration procedure, as part of the extension of the temporary public ownership tool to holding companies.
	In summary, this group of amendments is an important addition to the Bill that will allow the special resolution regime to be effective for banks that are part of complex corporate groups. I hope that I have demonstrated the strong rationale for taking these powers. The matter was debated in the Lords, and we are happy to concur with their views on it.

Mark Hoban: I am grateful for the time that the Economic Secretary spent discussing the matter because it is important. It was not aired in the Bill's earlier Commons stages, as the amendments were introduced in the House of Lords.
	Part of the problem stems from the fact that clause 2 defined banks quite tightly as entities authorised to accept deposits, and we will come to that when we discuss a later group. The clause almost envisaged a situation in which a bank was a stand-alone entity, or one where the bank was both a licensed deposit-taker and the holding company of a banking group. The amendments reflect the complexity of corporate structures in the UK, and they reflect the complexity of financial services groups, where a range of activities can be undertaken by a bank.
	The Economic Secretary presented a cut-and-dried process whereby the holding company and the deposit-taker would be subject to a transfer order, and where they are ring-fenced, in a way, from the rest of the group. Although he sought to reassure the House on the standards that would be applied before using such powers, I was less confident that the Treasury had thought through the process by which the powers would be used in practice. I cannot say that the Treasury believes that the powers will be used, because that would imply that it knows something we do not, but it must think through their implementation more carefully.
	Other issues will emerge. In the other place, Lord Davies of Oldham talked about situations in which a different entity could employ the people who work in the bank. A pension scheme could be shared across a number of different bank companies, and one of the amendments in the group deals with pension schemes. Within these entities, there may well be service companies that are integral to the functioning of the bank, and simply to say that transfer powers will be applied only to the holding company and the banking company might not be the best solution to the problem, although the continuity of service provisions in the Bill will help to deal with property and employees.
	It may not be as easy as the Economic Secretary thinks to segregate the holding company and the banking company as legal entities. At the same time, I understand the need to give reassurance to the integrated financial services companies about what will happen if part of their empire suffers problems. It would be unfortunate if an impression were given that the whole group will be sucked into public ownership if one part of it suffers problems.
	My hon. Friend the Member for Wellingborough (Mr. Bone) was right to raise the point about Tesco, which was mentioned in the House of Lords. A number of banks are part of different sorts of business entities, most of which will be part of a financial services company. Given the way in which supermarkets have moved into the financial services sector, we will end up with situations in which a bank, depending on how it has organised matters, could be part of a supermarket group. It is important to give some assurance about how the powers will be used. I understand why the Economic Secretary would try to avoid giving the impression that the Government can run Tesco, but it is not straightforward to say that the Government will only take on the bank and the holding company on the basis of there being an onward transfer power.
	I would like to touch on two more issues. The powers for holding companies also apply to the powers under clause 20, which relate to the ability of the authorities to terminate the service contracts of directors, and to vary their contract terms. We touched on this matter in Committee when we discussed whether the powers enabled the Government to intervene to prevent bonuses from being paid to bank directors. I will not rehearse those arguments, but in a case where one of the directors on the board of a holding company is responsible for the insurance division, could the Government terminate his or her contract using the powers in clause 20? There is a danger that the broad powers that apply to directors who are not related to the banking activity but are in the holding company could have an adverse consequence on their job security.
	The other issue was raised in the other place, and the Economic Secretary dealt with it today, but not directly. Will financial services end up redomiciling the location of their holding company? The Bill currently allows a UK-incorporated holding company to be taken into temporary public ownership. A banking group may decide, in order to safeguard its other interests and to avoid uncertainty, to redomicile its holding company outside of the UK so that only its UK activities would be affected. I wonder whether there is a risk, as we saw when HSBC considered changing its domicile last year for tax reasons, that the banks' reconsideration of where their headquarters should be based might be accelerated. If they move them outside the UK, that would be detrimental to the this country's interests. That might be an unintended consequence of the proposal, but it depends on the extent to which the proposal impacts the non-banking activities of those groups.
	I would be grateful if the Economic Secretary gave us some reassurance on how far the Government have gone with the process of thinking about the implementation of the powers and how they will affect integrated financial services companies. Will the powers in clause 20 that can be used to vary directors' contracts have unintended consequences, and will the changes have an impact on the competitive position of the UK as a place for financial services businesses to be headquartered?

Ian Pearson: I shall respond directly to the hon. Gentleman's points. First, on clause 20, the situation in relation to directors is unaltered since our discussions in Committee. Secondly, I wish to stress as strongly as I can the Government's view that there is absolutely no reason for bank holding companies to consider domiciling outside the UK as a result of the Bill.
	Thirdly, although one or two of my hon. Friends might like to think that we were slipping in some clauses that will allow us to nationalise the UK's high street, we are not doing anything of the kind. We are recognising that many UK deposit takers are complex group undertakings. That is why we have considered whether additional powers are necessary to resolve any substantial difficulties that those groups get into, and why we introduced the relevant amendments in the other place.
	The hon. Gentleman suggested that we had not necessarily done all our homework, but we have continually looked long and hard at whether the powers that we are taking are appropriate and necessary. As he knows, substantial contingency planning has taken place. He is right that it might be difficult to isolate the bank within a group, which is precisely why we need the ability to take a holding company into temporary public ownership. We could then stabilise the whole group and resolve the situation so that it goes out of public ownership, using onward transfer powers for a fast onward sale of the bank or the whole group.

Peter Bone: To use the example of Tesco again, I believe that the Minister is saying that if the holding company were taken into public ownership, the Government would be in charge of the supermarket section of it, even if only for a brief period.

Ian Pearson: I have been trying to stress that we are putting in place a series of tests and restrictions. We must recognise that deposit takers are complex group undertakings, which is why we need the power to take a bank holding company into temporary public ownership in certain circumstances. The hon. Member for Fareham (Mr. Hoban) asked how that would work in practice and how the powers would be exercised in detail. All circumstances are different, and the exercise of the powers would depend on the nature of the institution affected. He will be aware of the incredible amount of thought that would go into taking such decisions and the close contact that there would be between the tripartite authorities in deciding whether the threshold conditions had been triggered. The powers would be exercised only through one stabilisation tool—temporary public ownership—rather than through the bridge bank or private sector purchaser tools. That sets a very high test for intervention, as he knows.

Mark Hoban: I am grateful to the Minister for his comments, but we discussed the power to make the onward transfer of a bank, licensed deposit taker or holding company. However, the Minister talks about taking a group into temporary public ownership, which means its holding company, banking activities and non-banking activities. His comment that the whole group would go into temporary public ownership reinforces my concern that a group might seek to structure its activities or ownership so as to avoid that prospect, notwithstanding the safeguards that he has mentioned.

Ian Pearson: I understand the hon. Gentleman's point, but the proposals in the amendments strike the right balance and provide a high level of assurance about the Government's future actions. As we have repeatedly said during the Bill's passage, we hope that we will never have to use the powers in question, because we do not want banks to fail. However, we need powers to address the issue of bank holding companies. Our stabilisation objectives might not be met effectively if we retained only the power to act on a licensed deposit taker such as a bank. I believe that the hon. Gentleman accepts the general thesis that those powers are required, and I hope that the House will agree to the amendments.

Colin Breed: This is a complicated matter, and it seems to me that one advantage of having a financial services organisation within a large group such as a supermarket is that most people believe, rightly or wrongly, that the organisation has the strength of that group behind it. Perhaps that is one factor that gives them the confidence to use that organisation. The Bill might encourage such groups to take banking operations out of the group, because they do not want the Government interfering. An unintended consequence may therefore be that such financial organisations, licensed deposit takers and so on are taken out of groups, becoming stand-alone bodies and therefore having much less potential strength.

Ian Pearson: I appreciate the hon. Gentleman's concerns, of which we have been aware. In our consultations about whether it was right to take this power, we talked to a number of institutions and, I hope, allayed their concerns. I do not foresee that companies will want to restructure simply as a result of the power that we are taking in respect of bank holding companies. I therefore believe that his fears are unwarranted, but we will need to ensure that all the provisions that involve complex detail are kept under continual review.
	 Lords amendment 49 agreed to.
	 Lords amendment 50  to 53  agreed to , with Commons privilege waived in respect of Lords amendments 51 to 53.

Clause 75
	 — 
	Power to change law

Ian Pearson: I beg to move, That this House agrees with Lords amendment 54.

Mr. Deputy Speaker: With this it will be convenient to consider Lords amendments 55 to 57, 94 and 97.

Ian Pearson: Clause 75 has been the subject of much debate in both Houses. Indeed, it is fair to say that the provision has been forensically scrutinised, and I believe that the Government have made the case for the power to change law. In both Houses, the Government tabled significant amendments to address the concerns that the Opposition raised. I believe that if this House accepts the amendments that were made in the Lords, we will put our seal of approval on a clause that is tightly defined and limited, and has been subject to the fullest discussion.
	Let me briefly outline the subjects on which the Government have moved to meet the concerns of both Houses. First, we tabled an amendment in this place to ensure that the Bill could not be used to modify the Bill, or the secondary legislation made under it. As hon. Members know, the purpose was to make it clear that the Government would not amend the safeguards that are being established in secondary legislation. We wanted to provide legal certainty. Unfortunately, there was a technical problem with the amendment, which we corrected in the other place through amendments 55 and 56. Let me make it clear that those corrections do not undermine the principle of safeguarding the Bill's provisions and any standing secondary legislation under it, especially the partial transfers safeguards.
	Secondly, the Government have addressed concerns that were expressed about parliamentary procedure. The other place repeatedly emphasised that Parliament must be allowed to play its essential role of holding the Executive to account. I am sure that all hon. Members agree with that. The challenge that the Government face is enabling parliamentary scrutiny without compromising the authorities' ability to use the stabilisation options swiftly and effectively, and without jeopardising the possibility of an effective bank resolution. The clause recognises that by making the exercise of the power subject to the draft affirmative procedure, unless action needs to be taken urgently. To cater for cases in which urgent action is necessary, the Treasury may—only when it considers it necessary—make orders under the 28-day procedure.
	However, a particular concern in the other place was that, if Parliament struck an order down, the Government could reintroduce the same order ad infinitum. Of course, that was not our intention—indeed, it would be neither politically nor constitutionally credible. The Government do not believe that the clause could have been interpreted to permit that. However, to meet the concerns that have been expressed, the Government tabled amendment 57, which expressly requires any new order to be drafted "in new terms". That means that there must be a material difference between any new order and the original order laid before Parliament. In addition, of course, we expect the Government, in introducing any new order, to reflect on the concerns of Parliament. For the sake of consistency, amendments 94 and 97 make similar provision throughout the Bill. There will be no opportunity for the Government to avoid parliamentary scrutiny. The amendments were welcomed in the other place, and I hope that they will be welcomed here.
	Thirdly, the Government have addressed retrospection. The other place tried to ascertain exactly how the retrospective power under clause 75 would be used. As the Constitution Committee noted, retrospective legislation is not unprecedented, but must have a strong public interest justification. The debate in the other place coalesced around subsection (3), which provides that the Treasury may use the power if it considers it "necessary" or "desirable" to give effect to a particular exercise of a power under part 1.
	The constraint on the power—the "necessary or desirable" test—is not, of course, the only limit on the use of retrospection. The power exists not in a vacuum, but in a highly developed public law framework. It is important to recognise the range of constraints on the use of the power and that not all of them appear in the Bill—they do not need to do so.
	First, there are the convention rights. Article 7 is an absolute bar on the retrospective imposition of criminal offences, or increase in penalties. The use of the retrospective power may also engage article 1 of the first protocol—the right to the peaceful enjoyment of property. Retrospective interference with property rights needs especially careful justification, whereby the action must be proportionate to the public interest pursued. The range of cases in which it will be compatible with convention rights to interfere retrospectively with property rights protected by article 1 of the first protocol is limited.
	Secondly, there is the Government's duty to act reasonably. What "reasonably" means in practice will depend on the context. The more unusual or potentially unfair the proposed course of action, the greater the justification that will be required.
	The third constraint on the exercise of retrospective powers is the Government's respect for the rule of law and legal certainty. The Government take seriously their duty to act fairly and appropriately, and will always do that. However, we recognise that those public law constraints may not be enough to provide sufficient certainty. That is why we have gone further, to add something material to the range of existing constraints, and to avoid the potential for casting doubt on the existing safeguards provided by public law.
	The Government therefore tabled an amendment to delineate the power more carefully in response to the concerns that were raised. Amendment 54 does that by positively affirming the public interest in avoiding retrospection. In particular, it addresses the concern that the retrospective power could be deployed on a whim. It does that by retaining the words "or desirable", while making it absolutely clear that the flexibility inherent in the desirability test is not a licence to act lightly. Indeed, we are setting out that it is generally in the public interest to avoid retrospection, and that there must therefore be a countervailing specific public interest for the exercise of a retrospective power under the clause.
	Throughout, the Government's only immovable position has been that we cannot amend the power to the extent that it becomes unusable. As we have done throughout our proceedings on the measure, we have sought to achieve a compromise. The amendments demonstrate how the Government have responded to the constructive debate that has taken place. I believe that they are credit to the approach of this House and the other place, and I commend them to the House.

David Gauke: As the Economic Secretary said, the provision has received a great deal of scrutiny. Clause 75 is essentially a Henry VIII clause, which permits the amending of primary legislation by secondary legislation. It is not surprising that that caused considerable concern in this House and the other place.
	There are two broad concerns. First, there is the constitutional point about parliamentary scrutiny and accountability. The second anxiety, which should not be ignored, is the practical matter of the amount of uncertainty in the Bill and the various protections that we have debated—for counterparties, for example. If the protections available to them can be amended by statutory instrument, they are less substantial than we think. That is important to confidence in the UK banking sector.
	Both the original clause and the current provision contain specific aspects that are worth highlighting briefly. First, there is the basic point that the clause allows secondary legislation to amend primary legislation. Secondly, there is the extent to which the clause can have retrospective effect—the Economic Secretary referred to that, and I will revert to it. Thirdly, although affirmative resolution is generally required, that is not the case if the Treasury deems it unnecessary. The protections that affirmative resolution affords therefore appear somewhat fragile.
	Fourthly, where we go down that route and a subsequent resolution is required from both Houses, that can be done within 28 days. That means that a recess occurring at the wrong time could cause a considerable delay. It would be perfectly possible for a change in the law to be made by a statutory instrument that would not be reviewed until some months afterwards. All those concerns have been raised at various stages of the Bill's progress and the Government have attempted to address some of them.
	Let me deal first with the retrospective effect, which is essentially what is driving Lords amendment 54. I note the Minister's comments about the constraints on retrospective legislation that already exist, given the terms of the Human Rights Act 1998, and the fact that he highlighted the issue of interference in property rights in particular. Retrospective legislation that interferes with property rights has to cross a number of hurdles if it is not to be vulnerable to challenge in the courts.
	It might be helpful to the House in getting a better understanding of how that argument works, as well as the constraints that apply to clause 75, if the Minister could give us an example. If I may assist him, in the spirit of co-operation that has characterised the Bill's progress, perhaps he could clarify whether interference in the contractual rights of senior bankers, including their right to receive a bonus, would be vulnerable to a challenge under the Human Rights Act, because that would be seen as retrospective legislation that did not meet the public interest test that he outlined. I mention that in an attempt to gain a greater understanding of the existing constraints on retrospective legislation.
	In Lords amendment 54 we also have an attempt to ameliorate the concerns that exist. It may be a well-spirited attempt, but it is perhaps open to some scepticism. Clause 75(3) states that the Treasury
	"may make provision which has retrospective effect in so far as the Treasury consider it necessary or desirable for giving effect to the particular exercise of a power under this Act".
	Lords amendment 54 would introduce the following qualification:
	"in relying on this subsection the Treasury shall have regard to the fact that it is in the public interest to avoid retrospective legislation".
	I would be grateful if the Minister could be a little clearer about the impact of that wording, which would presumably be helpful for the purposes of judicial review. We raised our concern in Committee that it was the Treasury alone that would consider whether such action was necessary or desirable, which seemed to be a somewhat subjective test.
	If I remember rightly, we proposed an amendment to the effect that the Treasury should "reasonably" consider such action necessary or desirable. I wonder whether the new wording makes the test more objective and therefore less vulnerable to challenge under judicial review. If the new wording does not do that, I am not quite sure what purpose it serves. If Lords amendment 54 is an attempt to raise the hurdle in the way of the Treasury using the power for retrospective purposes, we would be sympathetic to it, but we question what difference it would make.
	The Minister described Lords amendment 56 as an attempt to address a technical failing and ensure that clause 75 would not allow the Treasury to amend the Bill, which is a concern that I raised in Committee. We welcome that. I am grateful for the explanation of Lords amendments 55 and, in particular, 56. However, it would be helpful for the House to have some reassurance that Lords amendment 56 in no way waters down the changes that Government have made to prevent clause 75 from being used to amend primary legislation, including, therefore, some of the protections contained in the Bill.
	If I remember correctly, we proposed an amendment in Committee that attempted to address the concern that clause 75 could be used to amend the Bill. That amendment was rejected, but the Government then came forward with their own proposals. I wonder—I say this out of sheer curiosity; I do not know the answer—whether our amendment had the same technical flaw as the Government's amendment did. If it did not, perhaps the Government would have been better off sticking with our wording. None the less, the intention behind what the Government are seeking to achieve is welcome.
	We also welcome Lords amendment 57, which addresses a concern that I raised in Committee about it conceivably being possible for the Government to present order after order for an additional 28 sitting days, which would all be rejected, yet enable the change in legislation to retain its effect. The Minister rightly said that that would not be politically or constitutionally credible, although it is perfectly possible for Governments to do things that are neither. None the less, the new wording and the intention behind it are welcome.

Peter Bone: There has to be some material difference between repeat orders, so can my hon. Friend clarify who decides whether there is a material difference? Is it the Executive or the Chair? If it is the Executive, that is a pretty pointless addition to the Bill.

David Gauke: I am grateful to my hon. Friend for raising that useful point. I will not attempt to clarify it, but I hope that the Minister will do so.
	We retain a sense of uneasiness about clause 75, but the Minister is right that there is a need for some flexibility, which is perhaps why we are not using more intemperate language or getting more excited. However, we feel uneasy about these Henry VIII clauses, and it is important to put that on record.
	It is also right to put on record our uneasiness about the potential for retrospective legislation. Given that the Government have passed quite a few such items of legislation during the handful of years that I have been in this place, it is good to hear them acknowledge that retrospective legislation is undesirable. Measures such as those covering air passenger duty and vehicle excise duty have been retrospective to a greater or lesser degree, which has been unfortunate, so if the Government are now giving an indication that they are less likely to pursue retrospective legislation in future, that is even more welcome.

Colin Breed: The Minister is right to say that this matter has had a great deal of debate and scrutiny. However, as the hon. Member for South-West Hertfordshire (Mr. Gauke) has said, at the end of it all many of us remain at least uneasy—and I could put it a little more strongly. To say that retrospective legislation is against the public interest is to state the obvious. One aspect of this matter that worries me is the legal uncertainty bit. In an area of our economy that is so important, we must have certainty. When we are in uncharted waters such as these, any uncertainty will be unhelpful.
	The Bill is primarily about the protection of depositors, and that is quite right. That is its main thrust. However, using retrospectivity to give them enhanced protection will potentially undermine or reduce the rights of another set of stakeholders. I am convinced that this will result in some real issues that will lead to a judicial review. The whole idea of balancing and of having fairness and desirability tests when we are, in effect, preferring one set of stakeholders to another, is fraught with difficulties. However, as the Minister hinted, the kind of amendments that would begin to satisfy me and many others would render the whole exercise of retrospectivity useless and unworkable. There is therefore no way we can get round this problem.
	Flexibility, used on limited occasions, is one thing; using this power in a wider context to address unforeseen circumstances on a larger canvas is something else. We shall have to see how it works out. I am unhappy, rather than uneasy, but I am prepared to support the measure because we need this legislation and because a case has been made for having some flexibility.

Peter Bone: I understand the Government's problem. Throughout the passage of the Bill, we have been discussing events that we hope will never happen, but we are trying to create certainty in case they do. The Government might not intend to use these clauses retrospectively, or indeed to amend the primary legislation. However, this Government might not be in power when a problem occurred; we might be in the fifth term of the prime ministership of my right hon. Friend the Member for Witney (Mr. Cameron) when such circumstances arose—you never know. We want to ensure that there is as much clarity as possible.
	One of my concerns is the use of statutory instruments. I sit on the Joint Committee on Statutory Instruments, which meets every week. We look at hundreds and hundreds of orders, the vast majority of which deal with minor matters in which specific regulations are being put in place that are clearly contained in the primary legislation. I fear, however, that the Bill could create a method whereby a future Government could amend the primary legislation by having a one-and-a-half hour debate in a Committee room and that, by the time the Front Benchers had spoken and perhaps two Back Benchers had said something, the whole matter would have been voted on. With statutory instruments, there is no opportunity to amend the regulation. We are talking about a really serious matter here, and it would be much better for the Government to introduce further primary legislation if they wanted to make a major change.
	This is a Henry VIII clause. I understand that the Minister wants some flexibility, and that he does not expect his Government to use the measure unfairly, but in 20, 30 or 40 years, someone could look back on this legislation and say, "Ooh! We can do this just by passing a statutory instrument!" That appears to be the situation, although I see the Minister shaking his head vigorously, so perhaps I have misunderstood it. However, many of the amendments seem to consist of fine words that do not go to the heart of the matter.

Ian Pearson: Any parliamentarian worth his salt will immediately be concerned about the potential for Henry VIII clauses and retrospective legislation; it is absolutely right that both this place and the other place have seen extensive scrutiny of the Government's proposals. I have to say that I believe we have won the intellectual argument about why these powers are necessary and why they need to be retrospective. Let me make it absolutely clear: I believe we have not only won the argument but built a consensus around the approach to be adopted. That is seen in a clause that is now tightly defined and limited. We are absolutely certain that, as a result, we will not need to amend the Bill or propose any secondary legislation. That is absolutely clear.
	As for retrospection, I acknowledge that it is always controversial, but hon. Members need to recognise that, in the context of a failing bank, we may need the flexibility to deal with all possible contingencies. There could have been a major fraud in the run-up to a bank's failure and, in that context, the authorities may need the flexibility to be able to make provision regarding events that happened before the making of the order—for example, to siphon moneys away from the company in a wholly uncommercial and illegal way.
	The hon. Member for South-West Hertfordshire (Mr. Gauke) talked about the impact of the wording on retrospection. The wording explicitly provides that the Government cannot use the power on a whim; they will have to demonstrate—for example, through a judicial review—that they took account of the public interest not to use retrospective powers before they actually use this power.
	In response to the question put to the hon. Member for South-West Hertfordshire in an intervention by the hon. Member for Wellingborough (Mr. Bone)—about whether it really matters that Parliament has to use a materially different form of words—I would argue that it would be for the Government to demonstrate to Parliament that there was a material difference and Parliament would have to be convinced of it. Indeed, the Government's action could also be subject to judicial review, if that were appropriate.

Peter Bone: The point I wanted to raise was whether the Government would decide whether it was materially different or whether it was for the Chair to decide whether it was in order.

Ian Pearson: It is always a matter for the Chair to rule what is and what is not in order. Certainly in the first instance, however, it would be the Government's responsibility to comply with the law. If we pass the amendment this evening and it comes into law, it will be the Government's responsibility to produce something that is materially different. I hope that Members will appreciate that the Government always want to act reasonably and to obey the law; they should expect us to do so.
	Lastly, let me deal with whether the clause will have a negative impact on legal certainty—an issue raised by the hon. Members for South-East Cornwall (Mr. Breed) and for South-West Hertfordshire. Given the consensus we have reached, we do not believe that the clause as drafted will have a negative impact on legal certainty. We have taken great pains throughout the debate on this legislation to ensure that that is not the case, whether it be in respect of this particular clause or other clauses. Exercise of the retrospective power might be used to correct a drafting error in a transfer order to put parties in the position that they thought they were in at the time of the transfer. I am happy to confirm that the purpose of the power is to enhance legal certainty for counter parties, not to diminish it.
	As I have said, I believe that we have won the argument about whether clause 75 is necessary. I hope that we are also about to agree on significant amendments to it to ensure that it is tightly defined and appropriate.
	 Lords amendment 54 agreed to.
	 Lords amendments 55  to 60 agreed to, with Commons privilege waived in respect of Lords amendment 59.

Clause 98
	 — 
	Liquidation committee: supplemental

Ian Pearson: I beg to move, That this House agrees with Lords amendment 61.

Mr. Deputy Speaker: With this it will be convenient to take Lords amendments 62 to 69.

Ian Pearson: The amendments introduce minor and technical modifications to the bank insolvency and bank administration procedures. The need for them was either identified during the drafting of secondary legislation or suggested by stakeholders. For the most part, they either apply further existing provisions of the Insolvency Act 1986 to the new insolvency procedures or provide for necessary modifications.
	Given the nature of the amendments, I do not intend to go into great detail. I should mention, however, that Lords amendments 61 to 64, 68 and 69 make minor changes in technical areas such as the formation of a liquidation committee, the removal of a provisional bank liquidator or administrator, and the process of disclaiming onerous property. Lords amendment 67 is a minor consequential amendment to the bank administration procedure to include a reference to reverse property transfers. Lords amendments 65 and 66 modify the application of certain provisions of the Insolvency Act 1986 which are relevant to Scotland, to ensure consistency with the way in which corresponding provisions in England and Wales have been modified in their application to the bank insolvency procedure.
	The amendments improve the effectiveness of the new insolvency procedures introduced in parts 2 and 3 of the Bill. They were welcomed in the other place, and I commend them to the House.
	 Lords amendment 61 agreed to.
	 Lords amendments 62 to 71 agreed to.

Clause 188
	 — 
	Directions

Ian Pearson: I beg to move, That this House agrees with Lords amendment 72.

Mr. Deputy Speaker: With this it will be convenient to take Lords amendments 73, 74 and 96.

Ian Pearson: As Members will know, the Government have amended two elements of parts 5 and 6 of the Bill in response to concerns raised in the other place. The first concern was raised in response to comments received by the Payments Council, a key body representing payment system operators, about exemptions from liability for such operators acting under direction from the Bank of England. Its principal concern centred on a scenario in which an operator could be instructed by the Bank—under its power to give directions—to continue to allow a failing bank to participate in a payment system even when that bank no longer met the criteria for participation. The question raised was whether the operator would be given an exemption by the Bank in respect of any liability arising from acting in accordance with the direction.
	The power to give directions is intended to provide a tool for the Bank to use in furtherance of the objectives of this part of the Bill: that is, to ensure that recognised inter-bank payment systems are operated in a manner that minimises deficiencies and disruptions that could threaten the stability of, or confidence in, the UK financial system, or have serious consequences for businesses or other interests throughout the UK. We therefore do not envisage circumstances in which the power would be exercised in the manner suggested. Nevertheless, given the concerns raised, the Government considered it appropriate to address them, which is why Lords amendment 72 gives the Treasury power to grant, by order, an operator exemption from liability in damages in respect of acts or omissions carried out in accordance with a direction if that is appropriate in the circumstances.
	The amendment provides that the Bank should notify the Treasury before making a direction, so that the Treasury has an opportunity to consider whether it would be appropriate to make an exemption order. As the Bank may need to give a direction urgently in the interests of financial stability, we believe that the order should be subject to the negative procedure. For obvious reasons, it will be important that any exemption is in place at the time the direction is given. Government amendment 96 is consequential, updating the statutory instrument table in part 8.
	The second set of amendments concern the penalty clauses of parts 5 and 6. The Delegated Powers and Regulatory Reform Committee was particularly concerned about their application under part 6. Having considered both the Committee's report and the concerns voiced in Committee both here and in another place, the Government made amendments to assuage any fears about how the financial penalty power could be exercised.
	Amendment 73, which was agreed in the other place, provides that the Bank of England must prepare and publish a statement of the principles it will apply in determining both whether to impose a penalty and the amount of the penalty in respect of a compliance failure under part 5 of the Bill. It is intended that these principles will preserve the Bank's discretion in assessing whether to impose a penalty and the quantum of that penalty, but will also enhance the transparency of the enforcement regime.
	These principles will, no doubt, reflect the range of factors that will need to be taken into account in the decision process; for example, the scale of the compliance failure and the seriousness of the consequences arising, the resources of the payment system, and the frequency of the offence. However, in the interests of preserving the Bank's discretion in preparing and issuing the statement, the Government do not consider it appropriate to specify in the Bill the factors that the Bank must take into account. The statement of policy must be published on the Bank's website and a copy must be sent to the Treasury. We consider this publication requirement to be adequate to ensure the policy is brought to the attention of operators of recognised inter-bank payment systems and the general public. The Bank must review and revise the policy from time to time, as appropriate.
	In the interests of fairness, any penalty imposed by the Bank must, of course, be in accordance with the published policy at the time the compliance failure was committed. This offers guidance to operators of recognised inter-bank payment systems, while maintaining the necessary flexibility for the Bank to impose penalties that are appropriate in all the circumstances in each case. I trust that the hon. Members for South-West Hertfordshire (Mr. Gauke), for Dundee, East (Stewart Hosie), for Southport (Dr. Pugh) and for Gosport (Sir Peter Viggers), who spoke to this clause in Committee, will find that this amendment puts beyond doubt the assurances I offered at the time as to the circumstances in which a financial penalty may be imposed and also the scale of that penalty.
	Lords amendment 74 provides that the Treasury must specify in the banknote regulations a method for determining the maximum amount of penalty that may be imposed by the Bank for a breach of regulations or rules. This amendment was designed to address concerns that the Bank could conceivably have been enabled to set unlimited penalties under the banknote rules. As I have said, the Delegated Powers and Regulatory Reform Committee of the House of Lords expressed concerns that penalties were a matter left in banknote rules rather than in regulations. Under the amendment, which addresses that concern, it is intended that the banknote regulations will set out a formula for calculating the maximum penalty to be imposed for under-backing and will make provision in relation to a statement of policy on penalties to which the Bank must have regard in determining the level of the penalty imposed. I would like to reassure hon. Members that provision has already been drafted at paragraph 4 to schedule 1 to the indicative draft banknote regulations, providing that the amount of any penalty must be determined in accordance with a published statement of policy.
	All of these amendments address concerns expressed during parliamentary scrutiny of the Bill, and serve to set out in the Bill certain reassurances as to the scope of the powers conferred therein. I therefore commend the amendments to the House.

David Gauke: I have a few questions to ask the Minister on this group of Lords amendments. As he has said, Lords amendment 72 provides that the Bank of England must give notice to the Treasury before making a direction and that the Treasury may confer immunity from liability. I would be grateful if he would elaborate on the relationship between the Bank of England and the Treasury in those circumstances. It would appear that the Bank takes the lead and that this is merely a notification requirement. What would happen if the Treasury objected to a course of action taken by the Bank? What would happen if it objected to a direction that the Bank gave under clause 188?
	Lords amendment 72 states that the
	"Treasury may by order confer immunity from liability...in respect of action or inaction in accordance with a direction."
	Clearly, a degree of discretion is involved in the use of the word "may". During the Bill's progress we have had many discussions on using the term "may" as opposed to "shall" or "will". Could the Minister give an indication as to the factors the Treasury would take into account when deciding whether or not to confer immunity from liability in damages?
	Lords amendment 73 relates to the statement of principles to be applied in determining penalties, which, again, is to be sent to the Treasury. Could the Minister elaborate on the relationship between the Treasury and the Bank of England in this context? Will the Treasury have a formal role in giving its views on these principles? Will it be able to recommend or indeed require that the Bank of England changes these principles?
	Lords amendment 74 states that
	"Banknote regulations must establish a method for determining the maximum amount of a penalty."
	I merely note that there seem to be two separate regimes in parts 5 and 6. The one in part 5, which deals with the inter-bank payment systems, provides for a statement of principles with regard to penalties to be produced by the Bank of England, whereas the one in part 6 provides for banknote regulations to specify the maximum penalty. Will the Minister explain why it is appropriate to have two separate regimes, given that we are addressing both those issues in the same Bill, at the same time and in the same group of amendments? There may be good reasons for the slightly different approach being taken, but it might be helpful for the House to hear them. These Lords amendments attempt to address some of the concerns that we raised in Committee, and that is welcome. We are grateful to the Government for, again, listening to some of our concerns.

Ian Pearson: I welcome the hon. Gentleman's support for the amendments, which were agreed in the other place. He is right to say that the Government have carefully listened to the concerns that have been raised in a number of places, not least by Members of this House. He asks a number of detailed questions and rather than respond to each of them individually now—I am not sure that I would be able to do so—it is probably best if I write to him and place a copy of my reply in the Library of the House.
	 Lords amendment 72 agreed to.
	 Lords amendments 73 to 82 agreed to , with Commons privilege waived in respect of Lords amendment 75.
	After Clause 227

Investment banks: Definition

Ian Pearson: I beg to move, That this House agrees with Lords amendment 84.

Mr. Deputy Speaker: With this it will be convenient to discuss Lords amendments 85 to 88.

Ian Pearson: Lords amendments 84 to 88 provide the Treasury with powers to make regulations with regard to investment bank insolvency. They were inserted into the Bill after consideration in the Lords Committee, after I had signalled the Government's intention to do so in this House.
	The powers that the Government are taking with regard to investment bank insolvency are of critical importance. They have been brought forward to enable the Government to address the concerns about the recovery of client assets that have followed from the collapse of Lehman Brothers. I shall take this opportunity to explain how we are proceeding because it has not previously been discussed in this House.
	Hon. Members will be aware that when Lehman Brothers failed, its UK arm also collapsed. This subsidiary held a very large quantity of client assets. The exact sum is unknown, but is likely to have run to many billions of pounds. Much of this money may have been simply passing through Lehman's broker-dealer business at the point of default.
	At present, those clients to whom those assets belonged have no way of recovering them outside of the normal insolvency arrangements. Those procedures could last for a substantial period of time as Lehman Brothers is one of the most complex insolvencies, if not the most, ever to occur. This is no small matter. If clients are unable to access assets that they believe they rightfully own, it of course has implications for market confidence in, and the effectiveness of, the legal arrangements—including those relating to insolvency—that support the UK financial system.
	Hon. Members will be aware, I am sure, that a major source of the UK's competitive advantage in financial services is the certainty provided by the relevant legal regimes in the UK. If those were seen to be insufficient, there would be implications for the future of the City of London as a financial services centre. Ineffective operation of insolvency arrangements in relation to investment banks and client assets could also have financial stability implications, if it impacted on the ability of clients to meet their own obligations to third parties. That may have particular relevance in the case of rehypothecated assets where recovery may be especially challenging.
	The Government therefore clearly need to act, both to ensure that clients have the ability to recover their assets more easily in any future investment bank insolvency, and in order to maintain confidence in the financial systems of the UK. It is unfortunate however that the sheer complexity of the challenges that have emerged since the failure of Lehman Brothers and its UK subsidiary defy simple solutions. The House will understand that the application of insolvency procedures to an investment bank, or any other large, complex financial institution, is complicated and challenging. To consider ways of revising such procedures is equally complex.
	For this reason, the Government have sought the advice of an expert panel with regard to the concrete steps that need to be taken in order to address those challenges. This panel, the establishment of which was announced in the pre-Budget report, is to consider how regulations may best be made that enable the unencumbered return of client assets without creating substantial externalities or negative consequences. The review will examine whether the statutory purpose of administration as provided for in the Insolvency Act 1986, presents problems in the case of institutions that hold client assets; the procedures for administration of a complex investment bank; and arrangements for the continuity of brokerage accounts.
	The provisions of these new clauses provide the Treasury with the powers necessary to make any changes that may be required as a result of this review. They are necessarily broad, for the simple reason that it is impossible for the Government to prejudge the conclusions of the expert panel, particularly in such a complex case. Let me reassure the House that the powers that these clauses confer would be exercised only if such changes were deemed necessary. The review may, of course, find that no changes are necessary. The powers are therefore precautionary, insofar as they will not be used without a clearly identified need to do so, and they will be closely targeted if deployed.
	Let me briefly describe the provisions of each of the clauses that lay out the powers. The new clause inserted by Lords amendment 84 is the first in the group and sets out the scope of the enabling power. The power will permit the Government to make regulations to change the insolvency regime for investment banks. Investment banks are defined as institutions, incorporated or formed under UK law, that have permissions under part IV of the Financial Services and Markets Act 2000 to carry on the regulated activities of safeguarding and administering investments, dealing in investments as principal or dealing in investments as agent. The clause also defines client assets as they are to be considered within the meaning of those powers and provides the Treasury with an order-making power to alter those scope definitions as necessary and appropriate.
	The next new clause provides that the Government may lay regulations to modify existing insolvency law in its application to investment banks or to establish a new procedure for insolvent investment banks. In line with existing insolvency law, the new regime would apply when an investment bank was either unable or likely to be unable to pay its debts or when its winding up would be fair.
	The following new clause provides the detail of what the regulations may provide for and how they would work. It includes provision for the regulations to set out those persons who can initiate the special procedure or who can make an application to a court for the procedure to be initiated by court order.
	The new clause inserted by Lords amendment 87 sets out the detail by which any regulations may be made. The clause will provide that the regulations should be made by statutory instrument and should be subject to the affirmative procedure. The Treasury must consult before making any such regulations.
	Finally, the new clause introduced by Lords amendment 88 provides for a review of insolvency regulations. As a consequence of the clause, the Government must establish an independent review of any regulations that have been made within two years of their coming into force. That review will be independent, expert, and impartial. It will consider whether the regulations have been effective in identifying, protecting and facilitating the return of client assets. It will consider whether, in drafting the regulations, the Treasury has paid due attention to protecting creditors' rights and ensuring legal certainty for all relevant stakeholders—creditors, clients, administrators and the investment banks. That is critical and will ensure that the impacts on those firms and persons who may be affected by the regulations are subject to full consideration.
	As I have said, the Government believe that the proposals are essential for supporting continuing market confidence in the UK as a major financial services centre. They were debated at great length in the other place, and rightly so. I believe that the provisions are necessary.

Mark Hoban: I am grateful to the Minister for the time that he has taken to set out the amendments in this group. He was right to highlight their importance and the way in which they have emerged. One point that was raised in Committee was the narrow focus of clause 2, which defined a bank as a deposit taker for the purposes of the Bill. That meant that it covered banks such as Barclays and RBS but not Lehman Brothers, which did not take deposits. That exchange in Committee took place just before information emerged from the administration of Lehman Brothers International (Europe) in the UK. That was a complex matter which gave rise to a number of practical and legal issues around areas such as netting off transactions and expenses and separating transactions to Lehman's accounts and those of its clients.
	It is worth quoting briefly an article that appeared last November about the perception of one group of Lehman's clients of the problems that they encountered with its insolvency. It appeared in the  Evening Standard and was based on a letter that the Investment Management Association wrote to the Financial Services Authority. It included comments such as:
	"The core problem was that when Lehman folded, institutions that had placed buy and sell orders for cash equities through the firm had no idea where they stood—whether the trades had gone through or not. Institutions needed to know because if they had been trying to buy and the deal had not been completed they would want to put that trade with another broker. Likewise, if they had been trying to sell. But what happened was that all the institutions' Lehman-related equity transaction held within at the Euroclear Crest settlement system were frozen. The system was locked up. They did not know where they were, whether they were in or out of the market—and this at a time of huge volatility. And it went on for nine weeks."
	Interestingly, the letter went on to talk about the lack of a proper contractual framework for some of the transactions, something that was highlighted once the implementation of the markets in financial instruments directive had taken place. Clearly, therefore, various issues emerged from the administration process for Lehman Brothers in the UK with which we need deal. That is why, when the Government announced in the pre-Budget report that the Bill would be amended to introduce new rules to deal with the administration of investment banks, they received support from Conservative Members. However, there was also a recognition that the framing of the rules was not straightforward and, in his remarks, the Minister made very clear the complexity of the issues involved.
	I want to touch on two issues. The first has to do with the principles underpinning the regulations, and the second with the parliamentary process. One of the challenges arising out of these matters is definitional, especially as the term "investment banking" is not found in the Financial Services and Markets Act 2000. So Lords amendment 84 lists the sort of activities that such a business might undertake and uses that as the basis of the new clause.
	Is the Minister happy that the definition is broad enough as it stands to capture investment banks that are incorporated in the UK? Does he envisage any further changes? The Bill limits the powers to UK-incorporated institutions, and Lehman Brothers International (Europe) was obviously a UK-incorporated business, but there are branches of European economic area banks that operate in the UK and undertake investment banking activity that would fall outside the Bill's terms.
	Has the Minister had discussions with his EU counterparts on this matter? If the law in Germany or France on the administration of investment banks was not especially satisfactory or clear, the collapse of a German or French investment bank would have an impact on London's international activities.
	Clearly, some learning from the experiences of Lehman's clients has gone on. Subsection (3) of the new clause that is amendment 85 sets out the "have regard to" factors. It is important to set out the framework in which the regulations will be put together, to ensure that they work in the interests of the UK financial services sector, and to make sure that there is certainty for banks, for creditors and clients, and for liquidators and administrators.
	The issues that the Government will have to tackle when they draw the regulations together will in a way mirror some of the matters that have been debated in the context of set-off and netting. Those matters have been discussed throughout the Bill's passage, and it is worth reiterating the importance of achieving a proper resolution of the issues to do with set-off and netting.
	In my conversations with regulators and practitioners, it has been made clear that getting this wrong would mean that transactions would be accounted for on a gross rather than a net basis. That would flow into capital requirements and make London less attractive for international businesses, but Lords amendment 86 illustrates some of the challenges that the Government will face. It also makes it clear why there needs to be some proper parliamentary scrutiny of the secondary legislation.
	For example, subsection (6)(b) of the new clause makes provision for determining which
	"assets are to be...treated as client assets".
	The use of the phrase "are to be treated" as client assets is key, as that is very different from saying that the assets "are" client assets. The process will be that someone will have to assume that the assets are client assets, but they may belong to somebody else.
	A difficult process of identification will be involved.
	Subsection (6)(f) of the new clause says that the regulations may provide
	"for the creation or enforcement of rights...in respect of client assets".
	We are talking about the creation of new rights in respect of those assets, and potentially re-writing contracts, so the provisions in the regulations are significant. It will be difficult to introduce them in secondary legislation.
	That brings me on to my second point, which is about how the regulations are made and reviewed. Significant concern was expressed in the other place about the fact that the powers are to be introduced through secondary, rather than primary, legislation. The bank insolvency procedure and bank administration procedure arrangements in parts 2 and 3 of the Bill are being put in place through primary legislation, and the Insolvency Act 1986 was clearly primary legislation, so there was concern about the extent of the regulations that will have to be made through the regulation-making powers in the Bill. Obviously, we welcome the fact that the regulations will be scrutinised under the affirmative procedure, and the fact that there will be statutory consultation before they are laid before Parliament. It is important that the consultation works and is thorough, because as every Member in the House is aware, there is no power to amend individual items in regulations, under either the affirmative or the negative procedure.
	The Minister talked about the review that will take place two years after regulations are made. Perhaps my memory is faulty, but I am not sure whether he touched on the sunset clause in subsection (4), which is inserted by Lords amendment 87. The subsection says:
	"If the power to make investment bank insolvency regulations has not been exercised"
	within two years of Royal Assent, the powers lapse. That gives rise to the question: is it the Government's intention to make regulations under those powers? The Minister indicated that work looking into the matter was under way, but is it the Government's intention at the moment to bring forward powers under that process, or can we assume that the powers will lapse after two years?
	Furthermore, as the Minister said, a review clause was inserted into Lords amendment 88, which requires a review of the regulations to be completed within two years of the regulations coming into force. There is a double lock there: if the regulation powers are not used, the power to make them lapses, and if the powers are used, there is a review after two years. There was a debate in the other place about whether a sunset clause should apply to the regulations, so that they, too, lapse after two years. There would then be consistency between the two sets of sunset clauses.
	I understand that it was argued in the Lords that it would be better for primary legislation to be made, and for the normal processes to be used to replace the secondary legislation. I had some sympathy with the view that there should be proper parliamentary process, particularly given that the powers in the regulations are so extensive and can impact on contractual rights. There is a strong argument for enhanced parliamentary scrutiny, and perhaps for applying a sunset clause to any regulations made, as well as to the power to make them. However, on the other hand, there was a strong argument about the need for certainty. One of the themes that has characterised the Opposition's contributions to the Bill, both here and in the other place, is the idea that there should be certainty for industry.
	The London Investment Banking Association has expressed the concern that if a sunset clause applied to the secondary legislation, it would create uncertainty. However, it supports the sunset clause that applies if no powers are made. Clearly, its position is quite subtle and nuanced. The association's concern is that if the regulations were subject to a sunset clause, there would be a perception that our insolvency procedures were in a period of flux. When people pledged or committed assets, they would not know whether there might be a change to the rules the next day if the rules had expired.
	I accept the position that we have reached, whereby if the regulation-making powers are not used, they will lapse. If they are used, there will be a review after two years. In reaching that conclusion, I suspect that the Government have erred in favour of certainty rather than parliamentary scrutiny. The test that they will face in introducing secondary legislation is to ensure that there is proper consultation with interested parties. Secondary legislation needs to be robust and command broad support. Inadequate consultation and a failure to listen will lead to poor secondary legislation, which will act as a disincentive to investment banks being based in the UK.

Ian Pearson: The hon. Gentleman made some typically reasonable points and managed in the end to argue in favour of the Government's position as set out in the amendments, particularly why we resisted a sunset clause of the type that was considered in the other place, and why we reached the decisions that we did.
	With the leave of the House, I shall make three brief points in response. First, history will judge very harshly the collapse of Lehman Brothers and the failure of the United States to intervene. It is obviously difficult to consider counterfactual scenarios and what might have happened had Lehman Brothers not been allowed to collapse, but it seems clear that that collapse precipitated a catastrophic crisis in confidence in the banking system and created a huge number of problems that have reverberated around the world and still affect the UK. The Lehman Brothers insolvency in the UK, as the hon. Gentleman rightly pointed out, is extremely complex and will take considerable time to resolve. We all wish that we were not in that position.
	My second point is in response to the hon. Gentleman's comments about applying the Bill to non-deposit takers. As he knows, the special resolution regime has been designed for deposit takers. It is an SRR objective to protect depositors and now to ensure the continuity of the banking service. The amendments deal only with clarifying the insolvency procedures for UK investment banks. Branches will be subject to home state insolvency.
	The hon. Gentleman asked whether we were discussing that with our European partners. We are in discussion with the European Commission, as is the Financial Services Authority, on issues relating to branches and to their regulation. I believe that the actions that have taken place over recent months have demonstrated that significant improvements are needed to the regime of home state regulation if it is to be effective in the future and if it is to give depositors confidence that a branch operating in the UK and regulated in a home state inside or outside the EU or the EEA can be regulated robustly in the home state.
	My third and final point is about subsection (4) of the new clause inserted by Lords amendment 87. The hon. Gentleman is right to say that the Government will make regulations, if necessary, as a result of the expert review that is taking place. The sunset clause exists to provide certainty to the market that the regulation-making power will lapse if not used. The wider proposals for sunset regulations would not work because they would, as has been clearly demonstrated, lead to far greater uncertainty. The proposed review has been welcomed by the markets and those who consider these matters. Again, we think that it strikes the right balance because changes to the insolvency regime are likely to be needed with respect to investment banks. However, we are not yet in a position to be definitive in legislation.

Mark Hoban: rose—

Ian Pearson: I think that the hon. Gentleman understands that.

Mark Hoban: I am grateful to the Minister for those remarks. It is important to get the issue right and for there to be the right degree of certainty. One of the comments made by the IMA was about the poor state of the contracts in respect of some of the transactions. Is further work by investment banks and their clients, to improve the clarity of the contractual terms that govern the transactions between them, an alternative to secondary legislation?

Ian Pearson: Different organisations, including the one to which the hon. Gentleman refers, have made a number of suggestions. We need to proceed carefully on this issue, which is extremely complicated. We have to ensure that we take the views of experts and carefully consider what policy interventions might be necessary. Only if it is explicitly recommended by an impartial group of experts should we proceed. Firms can expect that any changes to be made will be permanent. Again, that is vital for promoting certainty.
	We are well aware of the fact that we need to act decisively and without undue delay. I confirm to the House that there will be no vacillation as to the new insolvency procedures and that we will lay regulations, if appropriate, as soon as we have received firm advice from the expert panel. I am sure that what I have said will give the reassurances that the House seeks. I believe strongly that it will give confidence to those watching our proceedings who need to have legal certainty for their transactions.
	 Lords amendment 84 agreed to , with Commons privilege waived.
	 Lords amendments 85 to 88 agreed to.
	New Clause

Banking (Special Provisions) Act 2008: Compensation: valuer

Ian Pearson: I beg to move, That this House agrees with Lords amendment 89.

Mr. Deputy Speaker: With this it will be convenient to consider Lords amendments 90 to 93.

Ian Pearson: We now move to the final group of amendments. Amendment 89 would amend the Banking (Special Provisions) Act 2008, and clarify it with respect to information-gathering powers given to the independent valuer. It introduces a new clause that declares that the power, under section 9 of the 2008 Act, to make provision for the appointment of a valuer includes the power to replicate or make provision of a kind that may be made under the provisions dealing with similar matters in the Banking Bill clause 55(1) to (3). That will enable the Treasury to make an order to ensure that the independent valuer has all the powers he or she needs to carry out their functions, thus ensuring that an appropriate level of compensation, if any, can be determined in a timely fashion.
	The Northern Rock valuer has recently written to the Treasury requesting powers to allow him to obtain information from third parties where such information is necessary for him to be able to determine the amount of any compensation due to former shareholders. It is appropriate that the valuer has these powers in order to avoid delay in the future should a tribunal question his valuation decision for lack of evidence. Therefore, in the interests of determining the amount of any compensation due to former shareholders swiftly and definitively, we are making this amendment to the Bill to put beyond doubt the legal basis for the provision of such information-gathering powers by way of Treasury order. Any additional information-gathering powers provided to the valuers would be by Treasury order laid before both Houses of Parliament and subject to the draft affirmative procedure; and the powers, once granted to the valuer, would be governed by a court or tribunal.
	Moving on to amendment 90, the Government believe, as I have said in debate on several occasions, that full and effective co-operation between the tripartite authorities is both desirable and necessary. That is especially important in the case of safeguarding the UK's financial stability, where, as I have said, each member of the tripartite authorities has a distinct role to play. When addressing the Bank of England's new financial stability objective in Committee, my hon. Friend the Exchequer Secretary referred to the phrase "to contribute to" and said:
	"That phrase reflects the fact that the Bank does not have a duty to ensure financial stability on its own, because that would be impossible. That responsibility is shared nationally with the FSA and HM Treasury and internationally with the European Union and other international bodies, which all have a major role to play, alongside market participants themselves." ——[ Official Report, Banking Public Bill Committee, 30 October 2008; c. 240.]
	It is clear that the phrase "contribute to" implies that the UK's financial stability is not the sole responsibility of the Bank of England. However, on reflection, and having considered the concerns raised by noble Lords in the other place, we have decided to make explicit reference in the Bill to the fact that the Bank's financial stability objective will be pursued in collaboration with other relevant bodies, including the other tripartite authorities. Therefore, amendment 90 inserts wording to the effect that the Bank should aim to work with the Treasury, the FSA and other relevant bodies to protect the UK's financial stability.
	Amendments 91 to 92 broaden the circumstances in which a member of the FSA must disclose interests. With these amendments, the member must now disclose any interest in a business or dealing that falls to be considered by the committee, whether the interest is direct or indirect, current or a likely future interest. This, I believe, is the appropriate scope for the provision. As I have said previously, I am grateful to the noble Baroness, Lady Noakes, for tabling amendments in another place that highlighted where these provisions could be improved.
	Amendment 93 is consequential and removes what was subsection (3) of the new clause in the Bank of England Act 1998, which overlapped to a great extent with the new provisions for disclosure of interests. I commend the amendments to this House.

Mark Hoban: rose—

Hon. Members: Speak for England!

Mark Hoban: I think that my hon. Friends would be reluctant for me to do that, since I could speak for another 32 minutes on this group of amendments.  [ Interruption. ] I might be tempted to do so, but not on this occasion, to my colleagues' relief as much as mine, I suspect.
	The Minister said that the purpose of amendment 89 is to assist the valuer of Northern Rock in completing his work, and that it amends the Banking (Special Provisions) Act 2008. Can he confirm that there are adequate powers in the Bill to assist valuers when a company has been taken into temporary public ownership so that we do not have to return to this at a later stage?
	On amendment 90, we discussed in Committee the fact that it seemed rather odd for the Bank of England to be the only body that had statutory responsibility for financial stability. It is not a statutory responsibility of the Treasury or of the FSA, so this is a welcome move forward as it ensures that the Bank and the Treasury recognise their roles. We had tabled an amendment along similar lines in the House of Lords, but apparently the Government did not like our use of the phrase, "in co-operation with" and preferred the much more dynamic, "working with". I am not sure that I can see much difference, but the Government have their own view of what is and is not appropriate language to include in the Bill. I am rather grateful that they did not try to use the word subserviate in the amendment.
	On amendments 91 to 93, I echo the comments that the Economic Secretary made about my noble Friend Baroness Noakes, who has made a significant contribution to improving the Bill during the deliberations in the Lords. It is right to ensure that there is broader disclosure of any conflicts of interest of members of the financial stability committee, some of whom are non-executive directors who hopefully will have relevant experience from their business lives to contribute to the committee. I welcome all of the amendments.

Ian Pearson: I am glad that the hon. Gentleman gives such a warm welcome to the amendments. He asked whether it is our understanding that the valuer now has sufficient powers with regard to a bank in temporary ownership to conduct the work that it is required to do. That will be the case if the amendments are passed. Of course, that is not to say that other requirements may not come to light where the legislation might not be as effective as desired, but it is appropriate to the needs that we can envisage at the moment.
	 Lords amendment 89 agreed to.
	 Lords amendments 90 to 97 agreed to.

Business without Debate
	 — 
	Delegated legislation

Motion made, and Question put forthwith  (Standing Order No. 118(6)) ,

Child Trust Funds

That the draft Child Trust Funds (Amendment) Regulations 2009, which were laid before this House on 16 December, be approved —(Mr. Blizzard.)
	 Question agreed to.

SITTINGS OF THE HOUSE

Ordered,
	That, at the sitting on Wednesday 11 February, the Speaker shall not adjourn the House until any message from the Lords has been received and any Committee to draw up Reasons which has been appointed at that sitting has reported. —(Mr. Blizzard.)

BUSINESS OF THE HOUSE

Ordered,
	That, at the sitting on Thursday 12 February, notwithstanding the provisions of Standing Order No. 16 (Proceedings under an Act or on European Union documents), the Speaker shall put the Questions necessary to dispose of proceedings on the Motions in the name of Secretary James Purnell relating to Social Security and Pensions not later than three hours after the commencement of proceedings on the first Motion or Six o'clock, whichever is the earlier; proceedings may continue, though opposed, after the moment of interruption and Standing Order No. 41A (Deferred divisions) shall not apply .—(Mr. Blizzard.)

PETITION
	 — 
	National Parks (New Forest)

Julian Lewis: When the then Deputy Prime Minister announced in 1999 that the New Forest was to become a national park, the two hon. Members representing the New Forest were not alone among those critics who said that the imposition of such a regime would replace the interaction of voluntary and representative bodies with a top-down bureaucracy. That has come true, and we now have a phenomenon known as the forest uprising as a result of proposals made by the national park authority. The petition states:
	The Petition of Mr Desmond Swayne MP and 7,200 other residents and users of the New Forest,
	Declares that the proposals set out in the New Forest National Park Authority's National Park Management Plan and Local Development Framework Core Strategy and Development Policies August 2008—
	they really dream them up, do they not?—
	specifically Chapter 9, Policy DC 12 Recreational Horse keeping, DC 13 Field Shelters, and DC 14 Stables and Maneges, are poorly thought out, draconian in intent, and will have far-reaching repercussions on the quality of life, livelihood and freedom of many occupants of the New Forest and surrounding areas; and further declares that said proposals will have a serious impact on the traditional make-up of the National Park and its neighbouring communities.
	The Petitioners therefore request that the House of Commons urges the Government to withdraw these unsuitable proposed arrangements for the management of the New Forest.
	And the Petitioners remain, etc.
	[P000318]

CHARLES STUART

Motion made, and Question proposed, That this House do now adjourn. —(Mr. Blizzard.)

Marsha Singh: I wish to speak about the appalling way in which the Ministry of Defence has treated my constituent, Mr. Charles Stuart. The nub of my argument is that not only has he been treated very shabbily, but he has been refused the right of a hearing before the Air Force Board.
	Charles Stuart had an accident on duty in November 1991 at RAF Belize, when a falling heavy oil drum struck his head, injuring his neck. He was following instructions from his sergeant. At the time, Mr. Stuart was a 30-year-old senior aircraftsman, loyally serving his country abroad in the Royal Air Force in Belize. Ever since, he has struggled to get accountability from the service for the systematic neglect of his neck injury.
	Immediately following the Belize accident, the RAF failed to get Mr. Stuart proper medical attention or a doctor, even though he had reported sick. The accident was not subject to an investigation by a unit inquiry, despite having been entered in the section's accident book and his sergeant having full knowledge of the incident. A week later, Mr. Stuart flew back to the UK without having received the quality of care that he deserved.
	In early 1992, upon arrival at his next unit, RAF North Luffenham in Leicestershire, Mr. Stuart reported sick and complained bitterly of constant neck pain and headaches. The station medical officer cynically belittled his genuine symptoms as being a mind problem. RAF doctors prescribed tranquillisers and beta-blockers and compelled a sick man to do manual work for several months against his wishes, exacerbating his injury. His line managers labelled him a malingerer and refused him a second opinion at a local hospital.
	After six months of apparent medical laxity by RAF doctors, Mr. Stuart decided, with the support of his father, to complain to his commanding officer about the mistreatment of his health and well-being by his commanders. At the resulting interview, he asked his commanding officer to arrange an MRI scan of his neck, which should have been normal medical protocol. He warned his commanding officer that if such a scan was not approved, his father would report his ordeal to a newspaper. Lo and behold, the commanding officer advised Mr. Stuart not to go outside the service.
	The results of the MRI scan in August 1992 showed an abnormality—a prolapsed disc in Mr. Stuart's cervical spine. Only then was he properly medically protected by being fitted with a neck collar and advised not to do any heavy lifting and to avoid strenuous exercise. Soon after the diagnosis, he instructed a London solicitor to make a claim against the Ministry of Defence for damages for employer's negligence. His civil action was eventually successful, being concluded in 2005 after an 11-year battle.
	Meanwhile, nearly two years after being messed about by RAF doctors, Mr. Stuart was referred to a civilian spinal expert in 1994. The neurosurgeon stated that the prolapsed disc was the reason for his suffering and offered him surgery to remove the damaged disc and fuse his spine, in an attempt to alleviate his painful symptoms. The operation was given only a 30 per cent. chance of success, owing to the RAF's delay in both diagnosis and correct treatment.
	Unfortunately for my constituent, the surgery was not successful and Mr. Stuart was invalided out of the RAF in the summer of 1995 after 10 years' loyal service. His conduct was assessed as exemplary. He is now assessed by the Veterans Agency as 70 per cent. disabled and unfit to work. The woeful neglect that he experienced and the whole unhappy situation reduced his trust in the service, and he submitted a redress of complaint in accordance with Queen's Regulation 1001 before leaving the service in 1995. It is important to note that, at about the same time, the Ministry of Defence admitted liability for his Belize accident. Mr. Stuart's complaint implicates two commanding officers and, ironically, Dr. Tony Batchelor, the current commandant of the Royal Centre for Defence Medicine at Selly Oak hospital—which treats injured soldiers returning from Iraq—for breaches of health and safety law and statutory RAF regulations, and asks for steps to be taken to ensure that the same does not happen to other servicemen.
	Officers assigned to handle the complaint never properly investigated those serious allegations, and no evidence was provided to show that doctors and witnesses were ever interviewed. Mr. Stuart therefore exercised his right to have his case put before the Air Force Board and stated his grounds for doing that. What concerns me is that, having presented his case and stating clearly the precise redress that he sought, Mr. Stuart's redress of complaint was unfairly closed by the RAF after six months, without being presented to the Air Force Board. He believes that that is not permissible within the regulations. The Royal British Legion and I support him in that belief.
	Having been so advised, Mr. Stuart carefully read Queen's Regulation 1001 and its guidelines, and, according to his understanding, the MOD was wrong in closing his case and may have contravened his human rights by not allowing him a fair hearing. That is why Mr. Stuart sought my help some two years ago, when I first contacted the then veterans Minister about the sad affair. I asked my right hon. Friend the Member for Islwyn (Mr. Touhig) to clarify whether Mr Stuart's complaint was closed in accordance with Queen's Regulation 1001. He confirmed that the regulation does not specifically set out the circumstances in which a complaint becomes closed and said:
	"This aspect of the process is governed by the concept of what is reasonable on the part of both the Ministry of Defence and the complainant."
	If that is to be believed, I remind the Under-Secretary of State for Defence, my hon. Friend the Member for North Durham (Mr. Jones), and the Ministry of Defence that my constituent has never agreed to his complaint being closed—he has never believed that that was reasonable—and that he has been penalised by the MOD for correctly following the regulation and its guidelines, as listed in Air Publication 3392.
	In the meantime, I sent my right hon. Friend the Member for Islwyn all the documents that Mr. Stuart kept from his 1995 complaint, so that officials could review matters. Unfortunately, in Mr. Stuart's view and mine, the review appears biased and wrongly criticises Mr. Stuart for not presenting his case, which he had already done. Ministry officials also failed to notice that Mr. Stuart had responded correctly to the advice of the senior investigating officer, Group Captain Baker, in not accepting the Air Officer Commanding-in-Chief's ruling, and chose to take all aspects of his complaint to the Air Force Board for final decision.
	My right hon. Friend also ignored Mr. Stuart's requests for a fresh investigation by the RAF. As a result of that unfair review, we decided in May 2006 to present a case to the parliamentary ombudsman. Unfortunately, the ombudsman could not investigate Mr. Stuart's case because the ombudsman is prohibited from examining public service personnel matters.
	In November 2006, my hon. Friend the Member for Halton (Derek Twigg) was appointed the new veterans Minister. I contacted him and requested another review because I felt that the previous one had been inadequate. I also wanted him to ensure that officers who had been responsible for my constituent's condition were made accountable for their mistakes. My hon. Friend replied by saying that he was content that full responses were given by his predecessor and that it was the correct decision to close Mr. Stuart's case in 1995 without presenting it to the Air Force Board. I have pressed the MoD twice more this year to reconsider the compelling evidence of this case, and I have been disappointed.
	It is clear that something went seriously wrong with the duty of care by RAF staff for Mr. Stuart's spinal injury. It is also disturbing that, having won his personal injury claim, which demonstrates serious breaches of the duty of care, the MOD is still not committed to accountability, and refuses to open the case and give Mr. Stuart his right to a hearing by the Air Force Board.
	I have no doubt that a culture of defiance and resistance existed—and probably exists now—in the RAF hierarchy, and it still appears to be rife at the MOD today. In all honesty, this contempt for injured servicemen, which is something that the Royal British Legion has recently been exposing, needs stamping out. Last week Mr. Stuart spoke to a senior British Legion pensions officer, who advised him that the resolution to his 1995 RAF redress of complaint under Queen's Regulation 1001 was still running, because the MOD cannot close his complaint without his permission. In any case, he had already chosen to refer his complaint upwards to the Air Force Board, which was his right. It is time that Mr. Stuart, my constituent, received justice.
	Finally, Mr. Stuart's case strengthens the case for an independent veterans ombudsman, which is what they have in Canada. Canada has an impartial, arm's length and independent veterans ombudsman who has the responsibility to assist veterans in pursuing their concerns and to advance their issues. We have a responsibility to our veterans, and a veterans ombudsman here would be an important step forward. My constituent deserves justice. He has been treated in a shabby and appalling manner. He is a veteran. We have a wider duty of care towards those men and women who are prepared to put their lives on the line for this country.

Kevan Jones: I congratulate my hon. Friend the Member for Bradford, West (Mr. Singh) on securing this debate. I am grateful for the opportunity that it affords me to update the House on Mr. Stuart's case, which is some 18 years old and has, over that time, been the subject of extensive correspondence between my ministerial predecessors, and my hon. Friend and his predecessors, as Mr. Stuart's constituency MP. Owing to the passage of time, much of the paperwork is no longer retained, but I would like to reassure my hon. Friend that the limited information available shows evidence of a detailed investigation undertaken by my predecessors into all aspects of the case.
	It might be helpful to recap the Ministry of Defence's understanding of Mr. Stuart's complaint. As my hon. Friend mentioned, Mr. Stuart sustained an injury to his neck and shoulder while serving at RAF Belize in November 1991. He subsequently reported sick in January 1992, upon which a full investigation was undertaken by the medical authorities and Mr. Stuart was put on what are referred to as "light duties". As my hon. Friend mentioned, he then took legal action against the Department concerning the injury and, after exhaustive investigations, accepted a full and final settlement in 2004.
	However, in addition to his legal claim, Mr. Stuart contacted his then Member of Parliament, the then Member for Workington, now the noble Lord Campbell-Savours, to raise a number of complaints about the treatment that he had received for his injuries while in the RAF and about the decision not to extend his RAF service. Mr. Stuart's concerns about his medical treatment were addressed by the right hon. Viscount Cranborne, then Parliamentary Under-Secretary of State for Defence, in his letters of 28 September 1993 and 21 February 1994 to Lord Campbell-Savours. Viscount Cranborne confirmed that there was no evidence that the medical staff who had been responsible for Mr. Stuart's health had been in any way negligent. On the contrary, it was clear that all the organic causes of his symptoms had been fully investigated.
	It was apparent that Mr. Stuart's complaint had been taken seriously at all times, with every effort being made to assist him. He was treated by a physiotherapist and saw a physician, an orthopaedic specialist and a neurologist at regular intervals. Viscount Cranborne concluded that his complaints had been taken seriously at all times. Mr. Stuart continued to receive medical attention until his discharge on invalidity grounds in July 1995.
	As to Mr. Stuart's specific complaint against his physiotherapist in November 1994, the then Minister for Defence Procurement confirmed that the RAF director general medical services had personally reviewed Mr. Stuart's treatment and confirmed that there was no case to support the accusation of medical negligence against the physiotherapist.
	Mr. Stuart has also raised the issue of the extension of his service. He complained that although an extension of service by three years was offered to him in July 1992, which he accepted, it was subsequently withdrawn when the results of medical tests became available. Viscount Cranborne, in his letter of 28 September 1993, informed Lord Campbell-Savours that individuals can be offered extensions of service subject to continued eligibility and suitability for service. Eligibility and suitability must be confirmed by the individual's superiors and by medical staff before the offer is formally made to the individual. In Mr. Stuart's case, it was known that he was awaiting an appointment with a specialist at the time of the offer. I understand that Mr. Stuart contended that, since he had not at that stage been medically downgraded, the unit medical staff should have approved his extension of service. In fact, given that the unit medical staff were aware that he was awaiting further medical tests, it would have been a breach of regulations for them to have endorsed Mr. Stuart as fit for further service before the outcome of those medical tests. The case was therefore returned to the RAF personnel manning authority to await the outcome of those medical tests.
	The RAF authorities considered Mr. Stuart's request to be allowed to extend his service very carefully. Occasionally, personnel are granted a short period of extra service to enable them to regain an acceptable level of medical fitness to re-engage. However, following his medical tests, the medical staff advised that is was very unlikely that Mr. Stuart would regain the necessary level of medical fitness to enable him to be re-engaged in the RAF.
	On the issue of medical negligence, to which my hon. Friend has referred, Mr. Stuart initiated a claim against the Ministry of Defence in May 1993 in respect of the personal injuries he had sustained in Belize. That action took quite a long time to reach its conclusion, but it was settled in August 2004, when Mr. Stuart accepted an offer in full and final settlement of his claim against the Ministry of Defence. The conditions of that settlement precluded him from making any further claims against the Ministry of Defence in relation to the incident, or from pursuing any other course of action to obtain financial compensation. Having reviewed the file, it is clear that he accepted that offer in full and final settlement of any future claims against the Ministry of Defence.
	My hon. Friend has referred to the issue that is perhaps now at the heart of Mr. Stuart's case—namely, the redress of his complaint—and I should like to touch on that now. During the period 1993 to 1997, Mr. Stuart raised three redress of complaints procedures, in accordance with Queen's Regulation 1001. While there is little documentary evidence remaining about the level of investigations that took place, it is evident that a large amount of ministerial time was spent reviewing Mr. Stuart's case with RAF staff to ensure that a full, open and detailed explanation could be given in response to his inquiries. That is supported in the documentation that my predecessors have written in response to the large number of inquiries they received.
	Limited information is available about the investigation carried out in respect of the redress. I can therefore only refer my hon. Friend to the letter of my predecessor of 30 January 2006, which found that Mr. Stuart had been requested to provide further information in support of his redress of complaint to enable the investigation to take place. Unfortunately, despite a number of reminders, Mr. Stuart failed to provide the requested information and a decision was then taken to close the case. While there are no specific guidelines within Queen's Regulation 1001 regarding the closure of a case prior to submission to the Air Force Board, every reasonable course of action should be taken to ensure that all relevant information is available to enable the board to make a judgment on the case. Mr. Stuart had the option to request an extension to the deadline to enable him to provide the relevant information, but there is unfortunately nothing on the record to indicate that that was ever requested or that any further explanation was actually provided.
	In conclusion, it has been nearly 14 years since Mr. Stuart was invalided from the Air Force. I would like to put on record my thanks to him, as to all former servicemen and women, for their service to this country. Limited papers are now available to enable a further investigation to take place. That said, having considered the exchanges of correspondence and the information that has been presented to my predecessors, I am assured that all the complaints have been thoroughly investigated and that Mr. Stuart has been treated fairly within the parameters of the Queen's Regulations. In light of the fact that Mr. Stuart has accepted compensation in a full and final settlement of his injuries, there is no real basis for reopening the case now.
	In those circumstances and in the light of what has been said, and after looking at the case in detail today, I feel that there is really no way forward. I congratulate my hon. Friend again on securing this debate. I hope it is helpful to him if I say that if either he or Mr. Stuart has any further evidence that has not been presented so far, I would be willing to meet to discuss any such points and to see whether anything has been overlooked. I leave that option open to my hon. Friend; if he brings any more evidence forward, I will certainly meet him at his convenience.
	 Question put and agreed to.
	 House adjourned.